Facebook stock drops below $29 (+video)

Facebook stock falls 9.6 percent to close at $28.84. In its first seven days of trading, Facebook stock has lost nearly a quarter of its value.

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    This May file photo shows the Facebook campus in Menlo Park, Calif. Facebook stock fell to its lowest level yet Tuesday as lawsuits and official investigations sapped confidence in the company's future.
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Facebook's stock has fallen below $30 for the first time since its much-awaited public debut this month.

The stock fell $3.07, or 9.6 percent, to close at $28.84 on Tuesday. That's down 24 percent since its public stock debut. At midday Wednesday, Facebook stock was trading down another 1 percent $28.52.

Facebook Inc. began trading publicly on May 18 following one of the most anticipated stock offerings in history.

Recommended: Facebook IPO: Six key dates in its debacle

The site, which was born in a Harvard dorm room eight years ago and has grown into a worldwide network of almost a billion people, was supposed to offer proof that social media is a viable business and more than a passing fad.

Facebook's initial public offering of stock priced at $38 and raised $16 billion for Facebook and some of its early investors. It had valued the company at $104 billion — more than Amazon.com Inc., at $98 billion, at the time.

But the stock's public debut was marred by technical glitches at the Nasdaq Stock Market that delayed trading.

And the company, along with the investment banks that led the IPO, is the subject of at least two shareholder lawsuits. They allege that analysts at the large underwriting investment banks cut their financial forecasts forFacebook just before the IPO and told only a handful of clients. Morgan Stanley has declined to comment.Facebook calls the lawsuits "without merit."

Wedbush analyst Michael Pachter said that Facebook stock has been hurt by what he called "near-term issues" that include the Nasdaq glitches, an oversupply of stock that was being offered and the allegations of selective information disclosure.

But he rates the stock "Outperform" and has a 12-month target price of $44.

"Facebook has built a huge moat between it and its competitors, and we endorse Mr. Zuckerberg's mission," he wrote in a note to investors Tuesday, referring to Facebook CEO and founder Mark Zuckerberg.

With the latest drop, Facebook's value is about $79 billion.

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