What next for Facebook stock?
Moments after Facebook’s Inc.’s lukewarm earnings report battered its stock, Randy Wilk called his broker to ask if he should scoop up shares.
The instinct to buy at a bargain isn’t surprising — except that the Oakland man was burned in Facebook’s frenzied initial public offering of stock two months ago and said he is even suing the company to recoup losses.
“It’s a very risky stock, but if there’s a high risk there should be more reward,” Wilk said.
Rarely has such a hapless stock nevertheless infatuated so many investors.
Facebook has shed more than one-third of its value since the much-hyped IPO. It shriveled 19% on Thursday in regular and after-hours trading.
Yet it maintains an emotional hold on investors.
Some people rue the day they bought it. Others are relieved that they sold out with only minor losses. And many are holding on in hope that Facebook will somehow stage a miraculous comeback.
Facebook had been built up by some analysts and investors as a phenomenon capable of powering a rally in technology stocks.
It never became the Wall Street darling they hoped for — and the modest earnings could further pressure the beaten-down stock.
“I think some investors might have hoped for more from a company reporting its first quarter out of the gate,” said Colin Sebastian, an analyst with Robert W. Baird and Co.
Bob Calhoun bought 190 shares at $26.10 in early June. That was very close to its all-time low — until the stock sagged below $24 on Thursday.
“For the last month I was the smartest guy in the world,” Calhoun said. “Now I’m not so sure.”
Snah Desai, a 20-year-old economics major at Cal Poly Pomona, didn’t buy Facebook stock because he and his father thought it was overpriced.
But his mother disagreed and bought in, thinking she was latching onto the next fad that younger people were talking about.
“I’m probably going to get a phone call when I get home,” Desai said. “I’m probably going to get a nice earful of what she’s thinking.”
Aside from the financial hit, some investors are embarrassed at riding Facebook straight down.
One 23-year-old woman who has lost about $8,000 of her $25,000 investment in Facebook didn’t want to talk about it Thursday.
She’s chalking it up to a “life lesson,” she wrote in an email. But she didn’t want to speak to a reporter because “honestly, I don’t want my dad to know I did this.”
