Facebook Stock
Facebook Inc
NASDAQ: FB
May 20
no chart
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Last price25.76Prev Close26.25
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Change-0.49% Change-1.9%
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Open26.18Volume42,376,600
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Day Low25.69Day High26.19
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Bid25.84Ask25.85
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52 Wk Low17.7352 Wk High34.03
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Market Cap63,470ExchangeNASDAQ
Today
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What Drove Facebook (Nasdaq: FB) Shares to a New Low
Since Facebook Inc.'s (Nasdaq: FB) debut as a public company at $38 a share on May 18, and the stock's peak at $45 on the same day, shares have tumbled nearly 50%.
Facebook stock hit a fresh low yesterday (Tuesday), with shares reaching $17.55 before closing at $17.73.
The slump came after a trio of brokerage firms slashed their price targets for Facebook shares. The firms cited the wave of expiring lockup periods that will flood the market with close to 1.7 billion shares over the next several months.
The first lockup period expired Aug. 16, freeing a first batch of some 268 million shares. In mid-October, 192 million more shares will be let loose, and on Nov. 14 a whopping 1.2 billion shares will be free to sell.
The total is more than four times the number of shares floating on exchanges before the lockup periods began expiring.
"It's like a train coming around the corner toward shareholders, so they better get out of the way," Francis Gaskin, president of research firm IPOdesktop told the Los Angeles Times right before the end of the first lockup.
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Congrats on One Billion Facebook Users… Who Buy Nothing
Facebook (Nasdaq: FB) is on the cusp of amassing one billion users, unarguably a milestone.
The last official tally of Facebook users was 955 million. Employees have become giddy in expectation of reaching the one billion mark any day now.
But, they might want to hold off tossing confetti, because the momentous occasion will also shine a bright light on the social network's shortcoming.
No matter how many users Facebook acquires, if it can't sell anything, the landmark number is useless.
As Owen Thomas of Business Insider wrote, "Bottom line: One billion users isn't cool. You know what's cool? Two billion."
Facebook Sales Estimates Slashed
The failure to monetize that many subscribers is a shame because Facebook's massive user base is an advertiser's dream if effective - but there have been no signs of future revenue growth.
That's why market research firm EMarketer Inc. recently slashed its projections for the Menlo Park, CA-based company from $6.1 billion in annual sales to $5.04 billion. Facebook continues to struggle for advertising growth, in particular the fast growing mobile market.
[ppopup id="70925"]That’s why Facebook stock should really be trading for this amount. [/ppopup]
An increasing number of Facebook users are now accessing their accounts via smartphones and other mobile devices, an area where Facebook collects a great deal less in ad revenue than it does on desktop access.
Facebook enjoyed an 88% revenue increase in 2011. EMarketer estimates Facebook revenue will rise only 36% this year and 31% in 2013.
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Facebook Stock Hits New Low, So What Now for Mark Zuckerberg?
Since Facebook's (Nasdaq: FB) hugely hyped and highly anticipated initial public offering on May 18 at $38, shares have been sliced in half, hitting a low of $19.01 in trading today (Friday).
Now, chatter is swirling that CEO Mark Zuckerberg should step down and let a more experienced executive take the helm.
"There is a growing sense that Mark Zuckerberg, talented though he may be, is in over his hoodies as CEO of a multibillion-dollar public company," Sam Hamadeh, head of research firm PrivCo, told the Los Angeles Times. "While in many cases a company founder can, and does, grow into the job, things are happening so quickly that there is precious little time here for Zuckerberg to do that."
Fueling the sentiment is Facebook's steady descent since its calamitous IPO. On Thursday, as the first lockup period ended, which allowed early investors and venture capitalists to unburden their portfolio of battered shares, the stock hit a fresh low.
Facebook's shares closed Thursday at $19.87, a far cry from its debut price and peak of $45 a share.
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Will Apple Buy Facebook? No, But It'll be More than a Friend
It's a question that was getting asked as far back as three years ago, and seems to pop up again every time the Facebook stock price hits another new low: Will Apple buy Facebook?
Some tech pundits think that because Apple (Nasdaq: AAPL) has so much cash -- $117 billion as of the June quarter - and lacks a presence in social media, buying Facebook (Nasdaq: FB) just makes sense.
Those with more level heads think such a move would be a spectacularly bad idea -- and extremely unlikely.
"I can see Microsoft making a stupid decision like this but not Apple - MSFT has a history of overpaying for questionable assets, being late to the game and having lost what truly innovative mojo they had under [CEO Steve] Ballmer's watch," said Money Morning Chief Investment Strategist Keith Fitz-Gerald.
"I think Apple knows that the Facebook model is kaput and that it's not profitable - very similar to Google in that regard, which has held off from really rolling out Google+," Fitz-Gerald added."Shareholders would revolt...and so would the institutional money."
But Apple Chief Executive Officer Tim Cook has strongly hinted at a cozier Apple-Facebook relationship.
Calling Facebook a "great company" at the D10 conference in May, Cook said, "We have great respect for them. I think we can do more with them. Just stay tuned on this one."
Why Apple (Nasdaq: AAPL) Will Not Buy FB
Facebook's shaky business model isn't the only reason Apple would shy away from buying the social media giant.
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Sorry…Facebook (Nasdaq: FB) is Still Only Worth $7.50 a Share
The technorati took me to task. So did Wall Street.
They were agitated by an article I wrote in May explaining why the world's most hotly anticipated IPO, Facebook (Nasdaq:FB), was worth a mere $7.50 a share at best.
"Out of touch," one of the critics said. A "luddite" charged another.
"Doesn't grasp the significance of so many users," one Wall Street insider opined--who happened not coincidentally to work for one of Facebook's investment bankers.
Since then the social media darling has fallen another 31% to nearly $22 a share. Ten weeks later, Team Hoodie hasn't done much to merit an upgrade either.
Sorry guys...Facebook is still only worth $7.50 a share - likely less.
Here's why.
The Cold, Hard Facts for Facebook
At the time I reasoned that Facebook's valuation simply didn't merit the 100 times earnings IPO price of $38 a share based on comparable figures from Google (Nasdaq: GOOG) and Apple (Nasdaq: AAPL).
But there were a host of other factors as well.
I cited falling revenues, a lack of control over the mobile market channel, increasing distrust from customers who were voting with their feet and the concurrent departure of major advertisers like GM which will cost Facebook an estimated $10 million a year in revenue alone.
I also posited the assumption that Facebook would be unable to maintain the 100% plus growth that many investors believed was baked into the proverbial cake.
Google couldn't. Apple couldn't. And both of them are real businesses.
That's the key...real businesses.
Fact is, Facebook still hasn't figured out what it wants to be when it grows up.
Despite the fact that CEO Mark Zuckerberg does have some excellent advisors, the company isn't going to be able to hide the fact that its "business" is nothing more than a colossal time-wasting collection of personal interest items for much longer.
Other problems abound, too. All of them point to a lower share price.
[ppopup id="70925"]To continue reading please, click here...[/ppopup]
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The Lesser of Two Evils: Facebook vs. GM
If you had to buy either Facebook Inc. (Nasdaq: FB) or General Motors Co. (NYSE: GM), which are both down 40% from their recent IPOs, what would you do?
On Wednesday Money Morning's Shah Gilani appeared on Fox Business' "Varney & Co." to tackle that question.
With GM trading around $20 and Facebook stock hovering around $21, the share prices are both at or approaching 52-week lows, but which is the better value?
Gilani's answer may surprise you.
Watch the entire accompanying video to get a full analysis on each company.
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Another 1.7 Billion Reasons to Avoid Facebook Stock
As if there weren't enough factors to make Facebook (Nasdaq: FB) stock unattractive, there's a flood of free shares about to hit the market that could make it even harder to raise the share price.
In two weeks comes the first expiration of "lock-up" agreements, meaning certain investors barred from selling their shares will then be able to do so. Typically employees and big investors are required to hold shares for a certain time period after an IPO. This is done to reduce selling pressure and the chance of a mass exodus as soon as the stock starts trading.
But now some of those investors' shares will be freed up, and they want to cash in.
Editors Note: Why Facebook’s “Big No-No” Could Lead To Its Big Collapse [ppopup id="70925"]Click here[/ppopup].
Nearly 1.7 billion shares of Facebook stock will enter the market over the next few months, starting in mid-August. That is more than four times the number of shares now floating on exchanges.
"It's like a train coming around the corner toward shareholders, so they better get out of the way, Francis Gaskins, president of research firm IPOdesktop.com, told the Los Angeles Times.
The first batch of 268 million shares will be freed up in mid-August, followed by 192 million more shares in mid-October, and a whopping 1.2 billion shares will be let loose in mid-November.
Granted, a slew of those shares will not be sold, but the fresh torrent of shares to be set free far outnumbers the 421.2 million shares Facebook sold in its fabled IPO.
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Facebook Earnings Report Gives Investors Zero Reasons to Stick Around
The first Facebook earnings report since the company went public was released today (Thursday), and the numbers came in right in line with lowered, underwhelming expectations.
Facebook met earnings per share estimates of 12 cents on revenue of $1.18 billion. Analysts had expected EPS of 12 cents on revenue of $1.16 billion.
Estimates had been slashed several times and many experts did not think Facebook (Nasdaq: FB) would miss these lowered estimates - especially after is horrible IPO already delivered a colossal disappointment.
But the fact that earnings forecasts were so low made the fact that the company beat them a non-event.
"These earnings are meh," one equities analyst told Business Insider.
Another problem with the earnings report: There were no real clues as to how Facebook was ever going to make real money.
Facebook has had a hard time turning users into profits as more people use Facebook via mobile, an area Facebook has yet to monetize - and a key issue investors want addressed in today's earnings call.
"Everything is moving toward mobile," Debra Williamson, an analyst at eMarketer, told USA Today. "Gaining revenue from mobile and improving that experience are two things that Facebook absolutely has to focus on in coming years."
Reports surfaced Thursday that Facebook hired a team of former Apple Inc. (Nasdaq: AAPL) employees to completely redesign the Facebook iPhone app, which will no doubt include some of its new advertising plans. The aim is to generate more revenue from its growing mobile user base.
But it's still unclear whether or not Facebook can do that.
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Will a Weak Facebook Earnings Report Open Doors for these Competitors?
We know investors will want a few key details from today's Facebook earnings report, like how much more user growth the site expects, if it can increase ad sales and how it'll tackle mobile usage.
But something people haven't questioned as much is if there are any competitors lurking in the shadows that could eat away at Facebook's online presence.
Turns out Facebook has reason to be concerned.
MarketWatch's David Weidner last week addressed some competition creeping into Facebook's world. In his article "Here's the app that could kill Facebook," Weidner detailed how an up-and-coming app could actually threaten Facebook's hold on social networking.
Tack this on to the list of reasons to avoid Facebook stock - in case you needed any more.
Path: A Facebook Threat?
The app in question is called Path.
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