Facebook shares were down 8.4 percent in the afternoon trading on Monday after one Wall Street newspaper published a critique on the company’s stock.
Out of the 40 analysts covering The Social Network at Wall Street, one has the view that its share price is much over rated. The article blatantly compared FB’s stock value with Apple and Google, two of technology success stories.
The article said that both Apple and Google are trading 16 times their earnings in 2012 while Facebook is trading, even at lower than IPO price, 47 times its earning in the year. “(Apple and Google) two proven technology growth stories, both trade for about 16 times estimated 2012 earnings,” said the write-up.
In addition, the weekly also stated other analysts’ expectations on Facebook. Most of them have the speculation in $30s and $40s. “Most are in the high $20s or $30s,” according to the article, which posted on Saturday. “Many of these firms initiated coverage of Facebook with price targets in the $40s. Ours is admittedly an outlying view on the stock.”
The article was so well received earlier in the day that Facebook shares fell a whopping 11 percent, crashing the circuit breaker at NASDAQ that was meant to fend off short seller from stock manipulation.
Monday’s down price ends the three week streak of the company upward trend in the stock market. After hitting the all-time low of $17.55, more than 50 percent down from IPO price of $38, the stock spiked when CEO Mark Zuckerberg made a public appearance on September 12.
Zuckerberg gave an interview in a technology conference the day stating that the company doing well in mobile advertisement. He also stated that Facebook is now a mobile company but has no intention of launch its own smartphone or tablet.
Advertisement has been the company’s Achilles’ heel of late and the increasing mobile use of the network has not helped in the cause.