Facebook Shares Tumble on Second Day

By Josh Long Comments

Wall Street's bullish outlook on Facebook suddenly changed Monday after the shares tumbled in the second day of trading.

The 11 percent decline to $34.03 per share led to some skepticism about whether Facebook sold shares at an inflated price. As Bloomberg reported, Facebook last week raised $16 billion at $38 per share, valuing the world's largest social network at a whopping $104.2 billion.

"With revenue and EBITDA growth decelerating in 2012, we find Facebook's current valuation unappealing," BTIG Research analyst Richard Greenfield wrote in an equity research note Monday.

"To be fair, valuing Facebook is more art than science at this stage of its development and the current state of both social and mobile advertising," the analyst wrote in the note. "While the value/impact of advertising is always subjective, advertising on social media has been scrutinized to a greater degree as brands (and investors) wonder whether consumers are interested in brand messaging while they are engaging in social networking."

Enderle Group principal analyst Rob Enderle told Dow Jones Newswires that Facebook's earnings and revenues don't justify the high price of the stock.

Facebook last year posted a $1 billion profit on $3.711 billion in revenues, and its first-quarter 2012 results included net income of $205 million on revenues totaling $1.058 billion. Half of its 1Q revenues were generated by users in Canada and the U.S.

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