New York, May 30 (FinanceEnquiry.com) – Skeptics may be having the last laugh, for Facebook Inc (NASDAQ : FB) much-awaited, anticipated and touted public debut is proving more of a fizzle than a sizzle.
The shares of the networking giant hit a new low Tuesday, sliding below $29 for the first time as jittery investors dumped the company’s shares, casting aspersions on the social network’s long-term business prospects and calling into question an initial offering price that gave precedence to hoopla over substance.
The site, which was born in a dorm room eight years ago and has grown into a worldwide network of almost a billion people, was supposed to offer proof that social media is a viable business and more than a passing fad. But unfortunately, that’s not proving to be the case with the stocks of the no. 1 social network, as it continued its precipitous march southward diving 10 percent to an all-time low of $28.65, before closing at $28.84, or down 9.6 percent.
Facebook’s initial public offering of stock, priced at $38, raised $16 billion for Facebook and some of its early investors. It had valued the company at $104 billion more than Amazon.com (NASDAQ: AMZN), at $98 billion, at the time.
Beset by woes including technical glitches at the Nasdaq Stock Market, analyst downgrades and a string of lawsuits, Facebook in less than two weeks has shed approximately $25 billion in value – roughly equivalent to the market capitalization of Morgan Stanley (NYSE : MS), the lead underwriter of Facebook’s IPO.
The stock has also notched lower as some analysts have worried about Facebook’s strategy. They contend that a transition for Facebook from Internet social-networking to generating revenues on smartphones dominated by rivals Google Inc (NASDAQ : GOOG) and Apple Inc(NASDAQ : AAPL) won’t be a smooth selling for the company.
Facebook’s strategy to earn revenue from smartphones is also fueling a lot of speculation. There were reports over the weekend that the Menlo Park, California company was eyeing the acquisition of Norway’s Opera Software, which has been on the auction block for a while. In April, Facebook surprised some analysts by spending $1 billion to acquire Instagram, a photo-sharing company. However, spokesmen for Facebook and Opera declined to comment.
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