Facebook: The Stock That Keeps on Dropping

Facebook shares displayed on the NASDAQ market site screen, in New York's Times Square, May 18, 2012. Photograph by Angel Franco/The New York Times/Redux

Facebook, you surely know, is now chiefly synonymous with IPO disaster. Brokers and market strategists drop the word alongside “Libor” and “Flash Crash” to explain Mom & Pop’s disenchantment with the market. California says its tax revenue is at risk because of the Silicon Valley company’s stock’s swoon. The social network’s dud IPO has also poked millions of francs of red ink out of UBS, the biggest Swiss bank.

Facebook shares closed down 4 percent Thursday at another all-time low of $20.04, compared with their May initial offering price of $38, amid ongoing fallout from the company’s underwhelming first earnings report as a public company on July 26. The stock has its show-me work cut out for it just a red flags and obstacles keep popping up. On Wednesday, a couple of senior Facebook executives—Katie Mitic, former director of platform marketing, and Ethan Beard, head of platform partnerships—said they’re leaving to pursue other opportunities. In June, the company’s chief technology officer, Bret Taylor, announced his departure. Facebook’s operating margin and sales growth have both declined. And the number of ads it delivered in the U.S. fell 2 percent last quarter even its daily user count jumped 10 percent, management revealed on last week’s call.

“Ad impressions continued the recent trend of growing more slowly than users as more of our usage is on mobile devices,” said Chief Financial Officer David Ebersman. “This trend is particularly true in markets such as the U.S., where smartphone use is expanding rapidly.” Facebook announced its debut mobile-advertising platform just six months ago.

The social network still carries a not-insignificant market capitalization of $49 billion (down from a peak of $104 billion on its first day of trading) and a price-to-earnings ratio that is at least twice that of rival Google, according to Bloomberg data. But as Business Insider’s Henry Blodget explains here and here, concern and confusion over Facebook’s actual share count is not exactly inspiring Dodd & Graham value types.

And as “you bought, they sold” remorse still accompanies the ticker FB, there’s a ton more yet coming to market for sale. On Aug. 16, 271 million “locked-up” shares held by insiders and early investors will be freed up for trading. On Oct. 15, another 249 million shares will be added to the mix—then another 1.32 billion on Nov. 14. And 149 million shares for sale on Dec. 14. Just in time for Christmas stocking stuffing.

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