Facebook shares drop 10 percent

May 21, 2012
<p>Social media company&rsquo;s stock price falls following difficult opening day on Friday that included a 30-minute delay in trading</p>

Facebook shares have fallen 10 percent below their IPO price on Monday following Friday’s highly anticipated stock market flotation.

The social network’s shares were trading at around $33.50 this morning in New York. The stock closed at $38.37 on Friday, just above its pre-set IPO price of $38.

On Friday, Facebook’s shares initially soared by 10 percent but then fell back and had to be supported by the company’s underwriters, according to media reports. The float was also marred by a 30-minute delay in share trading that will be investigated by the SEC.

‘As is our practice, staff will review the incident with NASDAQ to determine its cause and steps will be taken to address it,’ SEC spokesman John Nester told Reuters in a statement.

The fall in Facebook’s value will raise further questions about whether the $38 IPO price – which implies a value of $104 bn – was justified given the company’s $4 bn in 2011 revenues.

In a sign of high demand, Facebook raised the number of shares being offered by 25 percent two days before the flotation took place.

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