Facebook Plunges to Record Low After IPO

Shares in the world’s largest social network Facebook plunged to a record low since its May IPO on the Nasdaq stock exchange on Wednesday.

Facebook shares fell 3.9 percent in Wednesday trading to $20.87 per share, closing at $20.88 or 45 percent below the IPO offer price, after four straight days of falls.

Facebook held a large-scale share offering in May, floating 421.23 million shares at a price of $38 per share, helping the company raise $16 billion and giving it a valuation estimated at $104 billion.

The network company has since taken a hammering in the markets against a backdrop of claims its IPO may have been mishandled by lead underwriter Morgan Stanley, and a perception its market debut had been hyped.

Facebook’s stock traded above $30 per share in late June and early July, but headed for further falls after the company published lacklustre second-quarter financial results.

Facebook reported a net loss of $157 million for the quarter ended June 30, 2012 compared with a net income of $240 million for the same period last year. The second quarter was the first loss-making quarter for Facebook in the past two and a half years.

The company’s stock plunge reflects investor uncertainty over the prospects. Facebook has to demonstrate its ability to generate revenue and monetize its mobile services to win back investor confidence, Business Week reported.


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