Stock prices for Facebook Inc. slid on Thursday as well taking the share to new low level of $26.83. The price was lower than even the lowest price set by the firm as a part of the planned IPO offering. In early trading on Thursday they had lost another 4 % or $1.12 to slump further. The IPO filing way back in February had put the valuation of the stock as the value on Dec.31 of 429.73 a share. On May 3, it said that it would be offering 2.1 billion shares and expected the price range to be between $28-$35 a share.
Howevr just a few days befor eth IPO the price range was taken to $33-$38 a share, and the firm was taken public eventually at the upper end of that range. The opening day saw the stock trading at $42 a share and along with the volumes trading at record high the share was trading as high as $45 a share, hwoever after hat it has been on a steady deckline and the stock closed just above the IPO pricing on day one and slid another 18 % in the next two days.
Given the current losses Facebook shares are trading at 29 % below the IPO price. The latest decline in the share prices Is being linked to the rumors that Facebook is planning to launch a smartphone of its own and that in the process of doing so might look for buying out a mobile company, thereby getting an entry into the mobile hardware industry which it has been looking to enter for a very long time.
Facebook must get used to the fact that every decision taken by the firm will be judged critically in the markets every single day and currently the markets are suggesting that a move into the smartphone sector could be value destructive.
Many analysts are keeping their recommendation as “buy” on the stock and maintaining a target price of $40, even though the current slide is worrying. They however say, in the wake of an acquisition, they could reverse their decision.
On the contrary, some people say that is the stock even worth the IPO price? Its valuation which is almost hundred times the yearly earnings it made most recently, make it much pricier than most other stocks. Given the recent decline, the market value stands at $60 billion which is still 60 times its yearly earnings.