How Low Can Facebook Stock Go?By: Mike Fossum - May 22, 2012
Facebook stock closed at $34.03 per share yesterday, and some speculate that there truly is no limit on how low it can go. Several factors have likely contributed to the sensational IPO’s less than stellar performance. NASDAQ had allegedly suffered a reporting problem early on, Facebook has been said to be unable to properly monetize its ad content, and may have possibly even filed a reduced guidance, reporting that the future of the company might be grim – some investors might even contribute the decline in stock to Zuckerberg’s hoodies he likes to wear, and that fact that he opted to get married in California, instead of ringing in the opening bell on the NASDAQ floor himself.
Some say the shares were plainly too expensive, at $38 a pop, and with the technical issues of NASDAQ, trading should’ve been delayed. Dave Rovelli, managing director of US equity trading at Canaccord Genuity in New York, states, “They shouldn’t have opened until 1 o’clock (Friday), until they fixed the glitch.” Rovelli adds, “All the buy-side institutions are shorting it. You can get a borrow on it and everyone’s leaning all over it. There’s no bottom – The next catalyst is going to be earnings, which is three months away. So there’s no reason to jump in here. You’re catching a falling knife.”
As the smoke clears surrounding the IPO event, there’s really no telling what will happen with Facebook’s stock, as months will pass before the company submits a quarterly earnings report. Until then, investors will be more realistically looking at the company. Phil Silverman, managing partner at Kingsview Capital in New York, states, “Unless you really want it in your portfolio I would wait for stability – It was a total fiasco on Friday. I was really surprised it went down. It just showed you that at this point there’s time to buy.” Still, Facebook does have 901 million users, and if it sorts out a better way of running ads, especially for Facebook mobile, there is nothing barring the social network from making huge gains.