Facebook Share Price Continues To Fall As First Share Lockup Expires

Facebook Has Fewer Friends (But George Soros Still Likes Them)
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The Facebook flop continued today, with share prices dropping by $1.41 (90 pence) to a record low of $19.69 (£12.51) shortly after opening on Thursday.

It's $38 opening price prior to the social network's floatation now seems like a distant dream, but it remains to be seen how many shareholders will cut their losses and run by the end of the day.

Peter Bo Kiær, equity analyst at Saxo Bank, said while there would undoubtedly be disappointment at the share price drop, for those who got in early enough there was still a handsome profit being made.

"The next six-nine months are crucial," he said. "There is a stiff headwind from shares being unlocked – the first batch today of 270m share but there is a slew of shares coming rest of the year.

"Each of the coming earnings reports will be scrutinised carefully to see how the Facebook is monetising the smartphones. The more investors see traction the more the share price will be underpinned as this is the main risk short term.

"One thing is sure – price swings are going to be large for the next six to nine months. Investing in Facebook is not for the faint hearted."

However, Facebook could take heart from George Soros, the legendary investor, who revealed he had spent around $10.6m (£6.7m) buying 341,000 shares in the social networking site last month.

Soros often takes investment decisions against the majority of the market and is known as "The Man Who Broke the Bank of England" because of his $1bn (£640m) in investment profits during the Black Wednesday currency crisis in 1992.

And some commentators believed today's drops were a result of post-IPO hype and that in the long term, the share price would return to the $30-40 mark.

Vanessa Barnett, a partner at law firm Charles Russell, told Huffington Post that while there would be some cashing in their shares over the coming weeks, anyone who bought them at the later stages would be forced to hang on to them.

"It can take people a year or so to get used to the shares after an IPO," she said. "But when the market starts to see Facebook make sensible decisions with its advertising strategy they'll become less frightened of trading shares - I think they could even creep back up to $40 by the end of the year."

And Josh Krichefski, chief operating officer at MediaCom, told Huffington Post he was sure many people will hold to their stock and wait to see what happens next.

"There is much to feel optimistic about at Facebook with revenue up in the first quarter and beating analyst consensus. The number of active users continues to grow with 955m at the end of June 2012, up 29 per cent year on year, and 543m of these using Facebook mobile products, up 67 per cent year on year.

"Facebook should avoid intrusive advertising placements as they are not what people want to see when looking at their news feed. It also needs to keep improving and enhancing its mobile product for users as the proportion of mobile social networking is only going to grow.”

At the time of going to press, the share price was $19.89 (£12.64)