Business upheaval for Facebook Inc.! The popular social networking site drooped to a confirmed low on Friday after the price targets of the stocks were slashed by a couple of brokers.
A weak advertising business supplemented by the huge share lockups is not good news for the company.
Facebook's shares plummeted more 5.39 percent to 18.06 dollars Friday, depicting a sharp fall for a stock that has been steadily tanking since its record IPO in May.
Investment pull backs
Bank of America Merill Lynch and BMO Capital Markets have both reduced the target price of the struggling networking giant to $23 from $35 and to $15 from $25, respectively. Consequently, the Facebook stock nosedived.
Daniel Salmon of BMO states, “Checks on paid media spending remain mixed; many conversations referenced a ‘pause’ in order to reevaluate earned/owned/paid mix and ROI [return on investment] measurement."
He added that “continued industry pricing pressure” was another risk factor.
On the other hand , Bank of America wrote to the Justin Post of its apprehensions that “Facebook has multiple lock-up expirations over the next year, and recent selling activity on the August lock-up suggests to us the risk of future selling pressure.”
A couple of investment firms marched on to slash the target price of Facebook and the co-founder of the Social networking site went on to sell its shares. This meant double trouble for the company.
Data analysis reveals that nearly 24 million shares had shifted from one hand to the other, in the first trading hour compared to 36.8 million, the daily average ,recorded for the last three months.
This is a big fall since its its introductory price of $38 a share in May IPO claims the ABC News.
Dustin Moskovitz, co-founder of Facebook and Mark Zuckerberg''s former Harvard roommate sold nearly 1.35 million shares for 26.2 million dollars , at a stock price of 18.79 to 20.08 dollars greatly effecting the share price of the company in the stock market .
Some time back Dustin Moskovitz had disposed off approximately 450,000 shares of Facebook, making 8.7 million dollars in the bargain .
Moskovitz and Facebook both maintain a staid silence over the issue.