Saturday, September 1, 2012

Facebook Inc (NASDAQ:FB) Shares Continues Southward Movement

The Facebook Inc(NASDAQ:FB) shares hit an another new low on Friday, brokerages cutting price targets being the immediate trigger. Several lockup expirations are scheduled in the next few months and analysts don’t see any respite for the scrip. The mood was set right on the day after the end of the first lock-in period, when the stock fell 6.3 percent.

The next expiration is due in mid October which will see 243 million shares hitting the market. On November 14, the free float will consist of an additional 1.2 billion shares. As of now, 628 million shares are available for trading. As long as these expirations continue, the scrip is expected to keep on facing technical challenges. Only after that will the fundamentals come into play. The situation is so bad that prevailing sentiment of investors is even worse than that of the advertisers.

Brokerages are slashing price targets drastically. For instance, analysts of BMO Capital Markets have lowered the target to $15 from the earlier $25. Even BofA Merrill Lynch, an underwriter to the IPO, has cut its price target to $23, $12 lower than what it had set earlier. The stock had debuted at $38 on May 18.
At closing on Friday, the scrip stood at $18.23 on the NASDAQ. The bad sentiment seems to have extended to even companies associated with the social networking site, like social gaming company Zynga which was also down 3 percent.

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