Facebook tumbles on negative comments - Hindustan Times
close_game
close_game

Facebook tumbles on negative comments

AFP | By, New York
Sep 25, 2012 09:00 AM IST

Facebook shares plunged after Barron's, the influential markets-focused newspaper and website, said the stock was still sharply overvalued and were possibly only worth USD 15.

Facebook shares plunged after Barron's, the influential markets-focused newspaper and website, said the stock was still sharply overvalued and were possibly only worth USD 15.

A-file-photo-shows-an-illustration-made-with-figurines-set-up-in-front-of-Facebook-s-homepage-AFP-Joel-Sage
A-file-photo-shows-an-illustration-made-with-figurines-set-up-in-front-of-Facebook-s-homepage-AFP-Joel-Sage

The shares slumped 9.06% to end the day at USD 20.79, after dipping as low as USD 20.36.

Hindustan Times - your fastest source for breaking news! Read now.

The fall came after Barron's published a story saying the world's largest online social networking company was still over-priced despite a drop of nearly half since its public offering four months ago.

"Facebook's 40% plunge from its initial public offering price of USD 38 in May has millions of investors asking a single question: Is the stock a buy?" Barron's said.

"The short answer is "No."

"What are the shares worth? Perhaps only USD 15," Barron's said, adding that even at that level they are "no bargain."

The shares are still above their post-IPO low of USD 17.55. But analysts have warned that on October 29 a huge new supply of shares from company employees, up to now prohibited from selling their holdings, could flood the market, putting more downward pressure on the price.

Addressing the IPO flop for the first time, on September 11 Facebook founder Mark Zuckerberg said: "The performance of the stock has obviously been disappointing and we care about our shareholders."

However, he assured that over time, "we're going to be making more money on mobile than we make on desktop."

But Barron's argued that the company was behind on addressing the challenge of getting advertising revenue from people using Facebook on their smartphones.

Moreover, it said, even at USD 15, the company would trade at a price-earnings multiple of 24 times expected 2013 earnings.

By comparison, two other tech giants, Apple and Google, trade at roughly 16 times this year's earnings.

But as Facebook sank yesterday, Google shares rose more than 2.1% to a record high of just under USD 750 a share.

Unlock a world of Benefits with HT! From insightful newsletters to real-time news alerts and a personalized news feed – it's all here, just a click away!- Login Now!
Stay informed on Business News along with Gold Rates Today, India News and other related updates on Hindustan Times Website and APPs
SHARE THIS ARTICLE ON
Share this article
SHARE
Story Saved
Live Score
OPEN APP
Saved Articles
Following
My Reads
Sign out
New Delhi 0C
Thursday, March 28, 2024
Start 14 Days Free Trial Subscribe Now
Follow Us On