Wednesday, August 15, 2012

Facebook Inc (NASDAQ:FB) Shares Unable To Sustained Recent Recovery

Shares of Facebook Inc(NASDAQ:FB) have been showing increased selling at every rise. On Tuesday the stock ended lower by 5.65% to $20.38 after reaching high of $24.54 earlier this week. The stock has almost lost half of its market cap since its debut in May.

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There's good news and bad news, depending on which end of the receiving line you are on. The good news is for Facebook, whose purchase of imaging company Instagram for $1 billion has been approved by regulators in the United Kingdom.

On Tuesday, U.K.'s Office of Fair Trading gave the go-ahead for the deal, without referring to it to wider authorities. Earlier it had expressed apprehensions that the acquisition could be monopolistic and restrict the ability of other services to compete with Instagram.

"The OFT has decided, on the information currently available to it, not to refer this merger to the Competition Commission under the provisions of the Enterprise Act 2002," the trading standards body said in a statement on its website.

The main concern of the trading standards body had been that the merger could limit people from using other photo apps on Facebook or could prevent the uploading of Instagram images on other similar sites.

However after investigating the deal it found that while both the parties had the required technology to impose those restrictions there was no incentive for the to do it.

This is indeed good news for the social networking site that has seen its stock being battered under slew o negative news. Now it has to wait for the approval of the Federal Trade Commission in the United States.

Now for the bad news and this is Zynga Inc(NASDAQ:ZNGA) which is at the receiving end of it.

Last month while reporting its second quarter results game developer Zynga had tended to blame its ally Facebook for its poor financial performance and the changes on its site, that prevented users from finding and playing its games.

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Facebook has however scotched that theory saying that game-playing on its site had actually risen. At a game-developers conference in Europe Facebook executive said that more than 235 million users played games on its site, up from 205 million a year earlier and compared to 217 million at the start of 2012.

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