Things do happen in threes and on Thursday, this could be said for Facebook Inc (NASDAQ:FB) shares. Its slide continued and in its short tenure, it has now dropped under its lowest estimated value as disclosed previously by the company.
Shares of Facebook dropped 4.5% to $26.95 in midday trading Thursday. At one point it fell to an all-time low of $26.83. Volume has been high at 33.4 million shares.
Valuations Rose, Share Prices Declined
Back in February with the company’s first IPO filing, it placed a $29.73 value per share as of Dec. 31. Fast forward to May 3 with its inaugural offering price estimate and the company said its 2.1 billion shares would now have a $28 to $35 value at its IPO.
But that wasn’t high enough. Just before its IPO, Facebook raised the price to between $34 and $38 a share. The stock went public at the high end after seeing a rise of $42–with a high of $45 on record-breaking IPO volume. We all know how it has turned about so far for this stock.
With the latest declines, Facebook shares have now tumbled about 29% from its IPO price. And just think, that was less than two weeks ago.
No News to Crush Stock
On Thursday, there wasn’t any major news that affected Facebook’s price. According to CNN, Laura Martin, analyst from Needham & Co., she said the current share drop is coming from investor worries over the rumored plans by Facebook to create its own smart phone to address its “mobile problems.” This could come, yet again, through another acquisition.
Martin said, “One thing Facebook management is going to have to get used to is that every decision they make is going to be judged every day in the markets. The creation of a smart phone is something that the markets are telling them is value destructive.”
But the possible smart phones didn’t inspire Martin to change her view of Facebook’s stock. She kept her $40 price target and her “Buy” recommendation. A change could be made if there’s an acquisition announcement but it won’t happen with a price drop.
So what is affecting Thursday’s stock price? One factor may be the lingering question of whether or not Facebook had ever really been worth its the IPO price. The company is a profitable one with a $107 billion market value derived from an offering price representative of more than 100 times its most recent full-year earnings, according to CNN.
This is much pricier than many other stocks. But with the latest slide, the company’s market value now stands about $60 billion–still a very pricey 60 times earnings.
From Thursday’s drop, it hasn’t been bad enough for Bloomberg to kick Facebook founder Mark Zuckerberg out of its World’s 40 Richest People list. While Facebook holdings had been valued at $19.3 billion at the close of trading from Day 1, it now stands at $13.6 billion as of Thursday.
It’s still enough money for a nice Italian honeymoon for Mr. and Mrs. Zuckerberg.
