Facebook Drops to Record on Growth Concern: San Francisco Mover
Facebook Inc. (FB) dropped 6.2 percent to a record low, the third straight day of declines after the world’s largest social-networking service reported second- quarter results that showed slowing growth.
Shares slumped to $21.71 as of the close in New York, the lowest closing price since Facebook held an initial public offering on May 17.
Facebook disappointed investors last week when it reported sales growth of 32 percent, down from 45 percent in the first quarter, and refrained from providing a sales or profit outlook for the year. The company also posted slower user growth and is grappling with concerns about how well it can boost advertising on mobile devices.
“There were obviously some people who didn’t want to sell on the first day in anticipation that you would see some stabilization and the stock price sort of return a little bit,” saidMark Harding, an analyst at JMP Securities LLC who has a market outperform rating on the stock and doesn’t own it. “Perhaps they’re disappointed by the lack of a recovery, and maybe now they’re using the opportunity to perhaps pare back.”
Facebook has lost 43 percent since the IPO.
Carlos Kirjner, an analyst at Sanford C. Bernstein & Co., lowered his Facebook price target by $2 to $23 a share today even as he upgraded the stock to a market perform from an underperform. Facebook is worth $19 a share, based on its value as an online-display ad company that’s gaining market share, he said. Growth opportunities, including new advertising markets, add another $4 to the stock price, Kirjner said in the note.
Lockup Expires
Facebook shares could fall in the coming months with the expiry of so-called lockup periods, which bar insiders from selling shares for a period after the IPO, Kirjner said. More than 200 million shares will come on the market in August alone, he said.
“Lock-up expiration may pressure the stock for the next few months, potentially creating attractive entry points,” he wrote.
Facebook on July 26 reported revenue of $1.18 billion, topping an estimate of $1.16 billion, according to data compiled by Bloomberg. Still, it reported that operating margin dropped from a year earlier and said payments-related sales were $192 million, below the $199.3 million average analyst prediction in a Bloomberg survey.
UBS Results
Facebook said in May that sales growth wasn’t keeping pace with user expansion as more people access the service with mobile phones. The number of ads delivered in the U.S. decreased 2 percent last quarter even as the number of daily users gained 10 percent, Chief Financial Officer David Ebersman said on the July 26 conference call discussing results.
Another stock under pressure today is UBS AG, Switzerland’s biggest bank, which faulted the Facebook IPO for hampering results in the second quarter.
The equities unit’s revenue was hurt by what UBS called a “gross mishandling of Facebook’s market debut by Nasdaq.” The bank, which entered orders for Facebook shares multiple times because Nasdaq wasn’t confirming them “for several hours,” said it will take legal action against the exchange.
To contact the reporter on this story: Brian Womack in San Francisco at bwomack1@bloomberg.net
To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net
Facebook Falls to Record Low, Declining as Much as 5.6 Percent
Duncan Chard/Bloomberg
Facebook Inc. declined as much as 5.6 percent to a record intraday low, the third straight day of declines after the world’s largest social-networking service reported second-quarter results that showed growth is slowing.
Facebook Inc. declined as much as 5.6 percent to a record intraday low, the third straight day of declines after the world’s largest social-networking service reported second-quarter results that showed growth is slowing. Photographer: Duncan Chard/Bloomberg
July 26 (Bloomberg) -- Gene Munster, a technology analyst at Piper Jaffray Cos., Michael Scissons, chief executive officer of Syncapse Corp., and Paul Kedrosky, author of the Infectious Greed blog and a Bloomberg contributing editor, talk about Facebook Inc.'s second-quarter results reported today and the company's business strategy. They speak with Emily Chang on Bloomberg Television's "Bloomberg West." (Source: Bloomberg)
Rate this Page
Bloomberg moderates all comments. Comments that are abusive or off-topic will not be posted to the site. Excessively long comments may be moderated as well. Bloomberg cannot facilitate requests to remove comments or explain individual moderation decisions.