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    Home»World»Facebook tanks in second day of trade

    Facebook tanks in second day of trade

    World By Editor21 May 2012
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    Shares in Facebook fell sharply shortly after markets opened in the US on Monday, falling by more than 13%, below Friday’s listing price of $38/share, as investors fretted about the company’s ability to grow as quickly as the high listing valuation demands.

    The share, which seesawed in its first day of trading last week before closing just a few cents above its listing price, had listed at the top end of price expectations.

    On Monday, the share plunged to $33/share, more than $5 lower than Friday’s close. At time of publication, the share was trading at $33,35, giving it a price-to-earnings multiple of a demanding 108. At these levels, the company’s market capitalisation is $93bn.

    The New York Times reports that on Friday, traders at the company’s lead underwriter, Morgan Stanley, “resorted to buying shares to prop up the price at $38, an important psychological barrier. To break the offering price would lead to what traders call a ‘busted IPO,’ an embarrassing moment for the underwriters.”

    It was unclear on Monday whether Morgan Stanley had again stepped in, the Times says.  — (c) 2012 NewsCentral Media

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