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.
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Volatility eased as traders focused on the world economy and corporate earnings after a week dominated by the dramatic spike in tensions over North Korea, which triggered a global sell-off before prices bounced back Monday.
Investors greeted the more conciliatory tone after US stocks dropped three days in a row last week on President Donald Trump's vow of "fire and fury" if North Korea continued to pursue its nuclear weapons and ballistic missile programs.
The ultra-conservative kingdom has moved to diversify its traditionally oil-dependent economy following a sharp fall in crude prices.
In its monthly report on the global oil market, the International Energy Agency said, however, that it believes the supply glut is easing, partly because demand is growing faster.
US stocks have been in retreat since President Donald Trump Tuesday issued a fiery warning to North Korea to halt its nuclear program.
The move by one of Japan's best-known firms greatly reduces the chance of an embarrassing delisting from the Tokyo Stock Exchange (TSE).
London's benchmark FTSE 100 index weakened by 0.5 percent to 7,503.39 points.
The approval by the European Commission comes just over two months after the European Central Bank -- which took on the role of the eurozone's banking supervisor in 2014 -- allowed the sale to go ahead for a symbolic fee of one euro.
BP, Chevron, ExxonMobil, Shell and Total have all published results in recent days, showing they pocketed $23 billion in net profit in the first half fo the year.
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