Shares of Facebook stock fell 9.62 percent to $28.84 on Tuesday. That’s down from the $38/share initial offering from just two weeks ago. This begs the question: how low will it go?
“If Facebook traded at the same price-to-earnings ratio as its competitors for online advertising dollars — such as Google — the social network’s stock would be worth somewhere between $16-20,” reports The Verge.
The post notes that this lack of investor confidence comes from the realization that as more Facebook users migrate from online to mobile, the social network has no proven track record in profiting from mobile — and seemingly no solid plan for the future.
This falling share price raises another concern for Facebook. According to The Verge: “Brain drain is the most potent killer in Silicon Valley, where a company can go from cutting edge to over the hill in a decade or less (hello, Yahoo!). If share prices keep falling, staffers will have far less incentive to stick around after the six month lockup on employee stock expires — and that could be very bad for business indeed.”
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