World Bulletin / News Desk
Facebook Inc's shares slid 6.2 percent to another record low on Tuesday, diving for the third straight day since lackluster results showed decelerating user growth and revived doubts about its ability to sustain its rich valuation.
A sobering report from Bernstein Research, combined with online chatter about the potential proliferation of automated Facebook accounts and a looming sell-off of employee shares next month all conspired torock the stock, analysts say.
Facebook has lost more than 40 percent of its value since becoming on May 18 the first American company to debut with a value of more than $100 billion.
The stock, down 6.2 percent at $21.71, still trades at more than 40 times forward earnings, versus Google Inc's 15.
Investors have punished the stocks of the No. 1 social network and other consumer-focused Internet companies such as Zynga Inc, questioning their ability to sustain growth and maintain lofty valuations.
Last week, Facebook reported results but offered no outlook or forecast for the year, disappointing investors who had hoped for affirmation of its growth prospects.
Wall Street is also bracing for a potential deluge of hundreds of millions of shares after Aug. 16, whenFacebook employees can sell their company-awarded shares for the first time.
"It's a combination of the Bernstein note, and partly complaints about the Facebook bot. Lockups are also causing pressure on shares today," said analyst Herman Leung of Susquehanna Financial Group, which owns and is a market maker in Facebook shares.
"People are just wondering what the next update is, and there's more headwinds than not. But the long-term story still feels intact."
Facebook's IPO was to have been the culmination of breakneck growth for the company that Mark Zuckerberg started 8 years ago in his Harvard dorm room. Instead, the May 18 Nasdaq debut was marred by trading glitches and accusations of inadequate disclosure.
On Tuesday, UBS blamed a 349 million Swiss franc ($360 million) loss from Facebook's botched debut on exchange operator Nasdaq, becoming the latest financial investment institution to report a hit from the first day of trade.
UBS said orders for the stock had been entered multiple times due to a systems failure.
Compounding Facebook's woes was a Tuesday report from Bernstein Research analyst Carlos Kirjnerthat valued its display advertising business at just $19 a share, half the company's $38 IPO price.
Kirjner set Facebook's 12-month target price at $23, placing a $4 premium on what he said was untapped advertising potential around the company's innovative social graph. But, that potential remains "yet to be defined and built," he wrote.
Kirjner on Tuesday upgraded Facebook to market perform, but suggested that the lockup's expiry, which could unleash up to 211 million shares, will weigh on the stock.
The size of the current float could be nearly tripled by November, as more and more employees begin tosell, Kirjner warned.
Finally, an Internet startup late on Monday publicly called into question Facebook's user-number claims, igniting debate among industry executives and on the Internet.
A commerce site called Limited Run, in announcing that it was deleting its Facebook page, claimed that 80 percent of its ad-clicks on Facebook came from "bots" or automated accounts, and only a fifth from genuine users.
"We're currently investigating their claims," said an external spokeswoman for the social network.
The euro reached $1.1388 Wednesday, the highest level since a year earlier.
The IMF warned that "significant policy uncertainties imply larger-than-usual" risks to the US outlook on either side, since spending cuts could lower growth, while tax cuts could provide stimulus and expand the economy.
Now the VNO-NCW is calling for the Dutch parliament to reverse a 2015 decision to introduce a cap of 20 percent of annual pay on the bonuses which can be paid out to top managers in the banking industry.
The state-owned energy trading firm Lietuvos Duju Tiekimas said it signed the deal with the Texas company Cheniere Energy.
Adding to the upward pressure for oil is the crisis in the Middle East, where a Saudi-led blockade of Qatar has fuelled concerns of possible conflict.
Bourses in both Paris and Frankfurt dipped after a report from data monitoring company IHS Markit showed Eurozone private sector business activity slowed sharply in June while staying in expansion mode.
Analysts said that while the downturn in the headline readings was disappointing, the economy continued to put in a strong performance.
Crude prices stabilised after diving more than two percent on Tuesday on increasing fears of a global supply glut, as continued production in the US and elsewhere offsets an OPEC output cut deal.
Move estimated to save company $1B in investment costs
However, most other regional markets struggled after Monday's healthy gains, despite being given a positive lead from Wall Street where the Dow and S&P 500 closed at fresh record highs.
The purchase in one fell swoop gives Amazon, which until now has operated almost entirely on the internet, a big presence in the brick-and-mortar world on Main Street, with more than 450 stores in the US, Canada and Britain.
"The Bank of Russia Board of Directors decided to cut the key rate to 9.00 percent per annum," the bank said in a statement. The cut follows a half-point decrease in late April.