Wednesday 13 December 2017

Facebook shares hit new low amid investor fears

Traders work at the Knight Capital kiosk on the floor of the New York Stock Exchange. Photo: Reuters
Traders work at the Knight Capital kiosk on the floor of the New York Stock Exchange. Photo: Reuters

Alistair Barr

Facebook shares slid below $30 (€24) to a new low yesterday as nervous investors fled the company's shares, concerned about the social network's long-term growth prospects and an initial offering price that in retrospect may have been too rich.

Shares of Facebook fell nearly 9pc to $29.05 in midafternoon trade, an all-time low.

The eight-year-old company, which began life in Mark Zuckerberg's dorm room, has now shed more than $20bn in value since its market debut at $38 on May 18.

A software error on Nasdaq OMX Group Inc's US exchange delayed the start of trade by 30 minutes on Facebook's first day of trading, which was to have been the culmination of breakneck growth for the cultural and internet phenomenon.

Revenue

Instead, claims of selective disclosure in the days leading up to the IPO about Facebook's slowing revenue growth engulfed the company in controversy, as did perceptions among some investors that the stock had been overpriced coming out the gate.

Wall Street has long harboured concerns that Facebook, while boasting nearly a billion users worldwide, would have difficulty translating its growing presence on smartphones and other mobile devices into revenue. Rivals Google and Apple now control the mobile arena.

Facebook options began trading yesterday, presenting a tempting target as more investors bet the underlying stock would head south.

They piled into put options -- granting investors the right to sell stock at a certain price -- marking one of the busiest debuts ever in the options market.

Vague talk about Facebook's next moves may also be giving some pause. Rumours that the company may be considering acquiring Opera Software pushed Opera's Oslo-listed shares up more than 26pc yesterday.

Analysts say the mobile-phone software maker could prove a crucial component in Facebook's still-patchy strategy to earn revenue from smartphones, but it could carry a price tag of as high as $1bn.

Irish Independent

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