Bears punish Facebook stock as options trading begins
The bears are out on Facebook Inc.
The social networking giant’s stock price closed down $3.07, or nearly 10%, to $28.84 on Tuesday. The precipitous drop began when Facebook went public May 18; since then shares have fallen 24%.
Since the IPO, Chief Executive Mark Zuckerberg has watched his business endure technical problems on the Nasdaq exchange and skepticism from analysts, many of whom believe the stock was overpriced and over-hyped.
Options traders swept into the market Tuesday and placed bets that the stock had more declines ahead, including some who felt it might slip another 42% before stabilizing. Tuesday was the first day for options trading on the stock.
Meanwhile, speculation that Facebook might be looking to make another acquisition also weighed on shares.
The latest rumors have the company targeting Face.com as its next big purchase. Facebook could pony up between $80 million and $100 million for the small company, according to the reports. Face.com is an Israeli start-up that develops facial recognition software.
Facebook declined to comment.
Don’t look for Facebook stock to rebound any time soon. There were also indications in after-hours trading that investors continued to unload shares. The stock was last trading at about $28.79.
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