Facebook crosses one billion active users mark
Facebook shares plunged after Barron’s, the influential markets-focused newspaper and website, said the stock was still sharply overvalued and was possibly only worth $15.
The shares slumped 9.1% to end the day at $20.8, after dipping as low as $20.4.
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 $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 $15,” Barron’s said, adding that even at that level they are “no bargain.”
The shares are still above their post-IPO low of $17.6.
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.”