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Facebook stock hit a new low this week. Will it rebound?
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Pick any descriptor you like – Facebook stock is down. And it does not seem to be going back up. On Friday, after analysts at Bank of Montreal and Bank of America-Merrill Lynch cut price targets on Facebook stock, shares in the company hit $18.14, the lowest since Mark Zuckerberg rang the Nasdaq bell on May 18. Facebook shares are now 52 percent below the initial IPO price, the Wall Street Journal reports.
The decline, notes the AP, "has been driven by a realization that the company's revenue isn't going to grow as rapidly as people envisioned during the breathless run-up to the IPO." In other words, there's the hype and now there's the reality. Meanwhile, a number of early Facebook investors have been rapidly unloading shares left and right; in November, Facebook employees will get a chance to sell their stock, too.
Unsurprisingly, on business blogs, there's been plenty of talk of doom and gloom and shrinking prospects for the social network. But over at Business Insider, Henry Blodget advises the critics to take the long view. "As I listen to all this whining, I have a simple question: Didn't anyone even read Facebook's IPO prospectus?" Blodget writes.
"The answer, I can only assume, is 'no.' Because if anyone had read the Facebook IPO prospectus," he continued, they'd know that Facebook's growth was already decelerating at the time of the IPO. Moreover, they'd know that "Facebook's social mission is more important to Mark Zuckerberg than Facebook's business," Blodget writes. "Facebook's business exists to support Facebook's product development, not the other way around."