The decline of the stock price as well as Nasdaq’s errors allegedly made during the IPO process are hot topics. The stock plunged below $30 in late May, down 24% from its initial trading price. Tuesday it was down 28.7%.
So a question arises when trying to valuate the social network. Facebook has the numbers, more than 901 million members in eight years, most of which are outside of the United States, but going public without a proven business model and a steady earnings stream can be risky for an overvalued stock like Facebook. Facebook has also attracted stock flippers and has become a day traders’ paradise which also leads to the instability of the stock we are seeing today. Facebook stock has literally become one of the worst performing IPOs in history and it is likely to underperform the markets and even potentially drop further towards the end of the year says the site Seeking Alpha.
Other newly public tech stocks like Groupon, Yelp, Zynga and Angie’s List that were already struggling are now having a harder time as well because of the issues with the Facebook IPO. “The Facebook (FB) fiasco has spooked a lot of tech investors, especially those holding shares of recently-launched social media companies with similarly unproven earnings streams,” say Forbes.com.
Only time will tell as these new media companies enter into the Wall Street game. Do you view this IPO as a success or failure? Are we seeing another dot com bust? Facebook has already entered the history books as a breakout social media channel, will they crash and burn as fast as their meteoric rise? We want to hear from you, let us know your thoughts!
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