Facebook shares plunged on Monday after Barron’s, the influential markets-focused newspaper and Web site, said the stock was still sharply overvalued and was possibly only worth US$15.
The shares slumped 9.06 percent to end the day at US$20.79, after dipping as low as US$20.36.
The fall came after Barron’s published a story saying the world’s largest online social networking company was still overpriced despite a drop of nearly half since its initial public offering (IPO) four months ago.
“Facebook’s 40 percent plunge from its initial public offering price of US$38 in May has millions of investors asking a single question: Is the stock a buy?” Barron’s said. “The short answer is ‘No.’”
“What are the shares worth? Perhaps only US$15,” Barron’s said, adding that even at that level they are “no bargain.”
The shares are still above their post-IPO low of US$17.55, but analysts have warned that on Oct. 29 a huge new supply of shares from company employees, up to now prohibited from selling their holdings, could flood the market, putting more downward pressure on the price.
Addressing the IPO flop for the first time on Sept. 11, Facebook founder Mark Zuckerberg said: “The performance of the stock has obviously been disappointing and we care about our shareholders.”
However, he assured that over time, “we’re going to be making more money on mobile than we make on desktop.”
However, Barron’s argued that the firm was behind on addressing the challenge of getting advertising revenue from people using Facebook on their smartphones.
Separately, Facebook on Monday denied reports that it displayed some users’ old private messages in public “timelines” at the social network.
Facebook said it investigated the complaints, initially from members in France, and was satisfied there had been no breach of privacy.
“A small number of users raised concerns after what they mistakenly believed to be private messages appeared on their Timeline,” it said in an e-mail response to a reporter’s inquiry.
“Our engineers investigated these reports and found that the messages were older wall posts that had always been visible on the users’ profile pages,” it said.
Concerns that private Facebook messages from 2007, 2008, or 2009 were being posted for public viewing spread wildly on one-to-many text message service Twitter after a story first appeared in free French daily Metro.
Facebook remained adamant that messages at issue were “wall” posts that have always been open to viewing by others and not made with private side-conversation tools subsequently added to the service.