Saturday, September 1, 2012

Facebook Inc (NASDAQ:FB) Had Two Bad News This Week, Shares slumped 7%

Social networking site Facebook Inc (NASDAQ:FB) is getting battered from all sides as the stock slumped 7% this week and made a new low of $18.03 on Friday.

In the markets insider investors are still offloading large chunks of its shares at regular intervals as an expiry on locked-in shares releases them for sale in the market.

On the other side analysts and investors are still uncertain about the company's ability to get more revenues as businesses that used to advertise on its site, are spending less.

Facebook cofounder Dustin Moskovitz, who once shared a room with Mark Zuckerberg at Harvard University, has been offloading about 150,000 shares on a daily basis since August 19, when the locked-in shares became eligible for sale.

According o regulatory filings Moskovitz has offloaded 450,000 Class A shares this week at rates ranging from $19.19 and $19.22.  The stake of Dustin A. Moskovitz Trust is now 6.15 million Class A shares.  The Trust holdings also include 106.8 million Class B shares that have higher voting rights, but can be converted to Class A anytime.

Facebook started off its journey in the stock markets on a bad note with the New York Stock Exchange delaying the start of trading due to a software glitch. The shares ended the day's trading almost at the price they had started at.

Its second quarterly earnings were disappointing with revenues showing signs of slowing. The company did not make any forecasts and uncertainty has only grown over what the future holds for the company.

Issues like the company’s mobile strategy and slowing growth are also bothering investors.

On Friday shares in the company fell 5.4 percent to $18.06, a record low, after a report that businesses were spending less on advertising on the site.

There already have been concerns over the continuing growth in its revenues especially with more than half of its 900-million subscriber base moving to mobile devices. Facebook has been finding it difficult to monetise its mobile subscriber base and get marketers on to it.

“Checks on near-term paid media spending remain challenged,” Daniel Salmon, an analyst at BMO Capital Markets Corp. in New York, said in a research report today.

eMarketer which recently slashed Facebook's revenue forecast for this year and the next said that the social network was grappling with questions from marketers about how well ads on its site are performing.

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