Facebook shares plummet with new profitability report.

By Park Sae-jin Posted : August 1, 2012, 14:20 Updated : August 1, 2012, 14:20
Facebook Inc‘s shares slid 6.2% to another record low on Tuesday, diving for the third straight day since lackluster results showed decelerating user growth and revived doubts about its ability to sustain its rich valuation.

A sobering report from Bernstein Research, combined with online chatter about the potential proliferation of automated Facebook accounts and a looming sell-off of employee shares next month all conspired to rock the stock, analysts say.

Facebook has lost more than 40% of its value since becoming on May 18 the first American company to debut with a value of more than $100 billion.

The stock, down 6.2% at $21.71, still trades at more than 40 times forward earnings, versus Google Inc’s 15%.

Investors have punished the stocks of the No. 1 social network and other consumer-focused Internet companies such as Zynga Inc, questioning their ability to sustain growth and maintain lofty valuations.

Other tech companies have faced similar questions with burgeoning start-ups such as Groupon already facing increased competition and greater scrutiny of profitability.


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