Brendan Mcdermid / Reuters
Monitors show the value of Facebook's stock Monday morning in New York.
By msnbc.com staff
Facebook stock's slide continued Monday, leaving some investors wondering about the outlook for the newly public social network.
Facebook's stock tumbled below its $38 IPO price on its second day of trading. By Monday afternoon the company?s share price was down 10 percent from Friday?s closing price of $38.23. (You can track the performance of Facebook?s stock price here.)
When a stock falls below its offer price so soon after an IPO it is considered a disappointment for the company, particularly when the IPO is the most heavily traded ever and concerns such a high profile company.
A number of reasons for the stock decline were offered by observers. Some pointed to underwriters offering too many shares, while others blamed an overly strong IPO price and worries about slowing revenue growth at the social network.
Investors and technology industry watchers are closely tracking the Menlo Park, Calif.-based company's shares. Facebook's initial public offering was one of the most anticipated ever and now serves as a bellwether for other social media companies.
?There must have been some sober second thoughts about this,? said Brian Wieser, an analyst at Pivotal Research Group who was first to come out with a ?sell? rating on Facebook's stock on Friday.
Daniel Ernst, principal at Hudson Square Research, said he still thinks Facebook is ?a fantastic company.?
?Fifty-three percent operating margins, 901 million users around the world. ? They can provide detailed targeting to advertisers,? he told CNBC. He noted that?many investors want to own Facebook?s stock, but for some the stock?s multiple -- a method for valuing companies and their stocks -- is too high.
?I really think we are in inning one of Facebook growth,? he said. ?I really think Facebook has something; for me, it?s just a question of price.?
Related: Facebook drops below $38 IPO price
Facebook?s market debut Friday suffered some hiccups.
Initial trading on the Nasdaq was delayed for?half an hour due to issues with some?orders. The stock closed Friday just a few cents above where it priced Thursday night. Although many investors had hoped for a big first-day pop, Facebook's stock opened Friday at $42.05 and fluctuated between $45 and $38 throughout the day before closing at $38.23.
Underwriting banks reportedly had to step in and buy shares to avoid the embarrassment of seeing the stock close below its IPO price on the first day of trading.
Bob Greifeld, chief executive of the Nasdaq stock market, admitted Sunday that technical issues had tarnished Facebook?s debut as a public company but argued that the technical glitches had not had an impact on the performance of the?shares.
Thomas M. Joyce, chairman and chief executive officer of trading firm Knight Capital Group, appeared on CNBC Monday to dissect Facebook?s first-day IPO flop Friday, and he laid the blame at Nasdaq?s door.
?This is arguably the worst performance by an exchange on an IPO -- ever,? said Thomas M. Joyce, chairman and chief executive officer of trading firm Knight Capital Group. "The failure was Nasdaq?s.?
Joyce argued that the Nasdaq snafu hurt the stock price.
?This was simply a technology problem,? Joyce told CNBC.??This was like your server going down, except on a massive scale. And instead of stepping back and rebooting, they kept plowing ahead.?
Wedbush analyst Michael Pachter, who came out with an "Outperform" rating on Facebook before its IPO, said investment banks that arranged the offering overestimated the demand.
Last week the bankers, led by Morgan Stanley, increased the offering price range. On Wednesday, the size of the offering was increased.?Both moves appeared to signal strong demand for the shares.
Related: Nasdaq ?embarrassed? about Facebook delay
?The late addition of 84 million shares to the offering overwhelmed demand, limiting the first day price,? Pachter said in a note to investors.
Deutsche Bank?s Brad Miller, an expert on pricing IPOs, said the?trading glitch?was due in part to the fact that it was?difficult to find a comparable company, or a competitor, to use when valuing the company.
Most IPOs value companies at well below?$25 billion, compared with more than $100 billion for facebook when it went public.
?It does create a bit of an issue,? he said on CNBC.
Miller said?Facebook?s lackluster performance might?make investors wary of investing in future?IPOs.
?Investors may take a pause after how the Facebook transaction has traded,? he said, adding that?market volatility is also an issue.
?April was the worst month in terms of money flows since 1984, and May is trending in that direction, so we need a turnaround in volatility,? he said. ?I think we are going to take a pause here in the new issue market (until we see the) macro issues subside.?
The Associated Press contributed to this report.
Shares of Facebook are down more than 12 percent since the company went public on Friday, with CNBC's Kayla Tausche, Bob Pisani and David Faber.
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