Facebook, Over Priced Over Promoted Drops Like A Stone

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A rout in Facebook shares trading on the New York Stock Exchange on Friday wiped nearly half its initial May value, dropping as low as US$19 for the first time.Investors have been concerned about Facebook’s ability to increase revenue and make money from its growing mobile audience.

The stock closed on its first day in May barely above its IPO price of US$38. It has been below that level since – and on Friday, the stock fell another 87 cents, or 4 per cent, to US$19.05 in afternoon trading.

The rout came as some early Facebook investors – but not employees – were able to cash out for the first time since the company’s initial public offering in May. Around 271 million shares, or nearly 13 percent of those on issue, became eligible for sale on the stockmarket – and many shareholders jumped at the opportunity to bail out of what is increasingly being seen as a vastly over-priced and over-promoted company.

Employees who own Facebook shares are only able to watch at this point. But lockup expirations in October, November and December will allow them to sell more than 1.4 billion shares. The biggest lockup expiration, freeing more than one billion shares, is set for November 14.

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