Shares in Facebook have dropped below the $30 mark, capping what has been hailed as the most disastrous start to trading of any major flotation in the last decade.
The social network has lost more than a fifth of its value since its faltering Wall Street debut on May 18, while its 28-year-old founder Mark Zuckerberg has been honeymooning in Rome. It is now unlikely to recover in the short term, analysts claimed.
After placing at $38, Facebook’s shares briefly peaked at $45 before sinking back to $38.25 on their first day of trading. They have fallen every day since then, and today plummeted nearly 10pc from $31.69 to $28.78 in afternoon trading in New York.
Many brokers are expected to cut their losses now that Facebook shares have passed the important psychological thresholds of $30 a share and a 20pc drop in value.
“When something is this broken this quickly, they sell and move on,” said Sam Hamadeh, managing director of US research firm, PrivCo.
“Historically, initial public offerings that trade down this quickly don’t ever recover. Brokers have lost quite a bit of money and many will have their own rules about dropping out when it passes that [$30] barrier.”
Facebook and its Wall Street advisors are already being sued by investors who lost out in the $16bn IPO, amid claims that they were misled about the social network’s business prospects.
The slump fuelled fears of a wider technology bubble, particularly among other social networks and consumer-orientated companies. In Russia, Vkontakte, which out-ranks Facebook as the country’s most popular social network, with 119m users, pulled its own IPO “indefinitely”.
Founder and chief executive Pavel Durov said the Facebook debacle had “damaged many private investors’ trust in social networks”. The company, whose biggest backer, Mail.Ru, also has a stake in Facebook, is valued at up to $3bn and had been eyeing an IPO in 2012 or 2013.
The flotation plans of $1bn travel search firm Kayak.com were also thrown into doubt. The US business was seeking to raise $150m in a June IPO but analysts it is unlikely to go ahead as planned.
Meanwhile Facebook was fighting to shore up its weaknesses by buying up mobile firms and hiring top-flight engineers to help it launch its own smartphone device.
The social network was reported to be in discussions to acquire Opera Software, a Norwegian mobile firm. Shares in Opera climbed nearly 20pc to 40.90 Norwegian Krona on expectations it could go for as much as $1bn
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