Facebook shares fall to under $30 in options trading
30 May 2012
Facebook Inc shares continued their weak showing yesterday as uncertainty and rumours pushed the social network's stock to less than $30, now down over 20 per cent from where it debuted less than two weeks ago.
Shares retreated 8.6 per cent to $29.16 in recent trading, even with a broader market rally. The stock was down to $29.05, down nearly 24 per cent from its initial public offering price of $38 on 18 May. Facebook shares have slipped over the past couple weeks following a messy IPO process and on concerns over the company's growth potential (See: Facebook shares down nearly 18 per cent below IPO price).
At its low today, Facebook had a market value of $80.4 billion, down from its IPO value of $104.1 billion.
The company also made its debut on the options market, to let investors bet on the future of the stock with less money at risk. Facebook options were the second-most actively traded today after Apple Inc. By noon, around 162,000 Facebook options had traded, giving the right to buy or sell 16.2 million shares of the stock.
The options traded all over the board, and some investors saw a jump to $65 a share by January 2014, with others betting on a slump to $16 a share by December. The largest option trades, however, bet on Facebook ending down summer, at $25 share price by mid-July.
According to some analysts when a lot of people bought puts, it put downward pressure on the stock because of the hedging that market makers had to do according to some industry experts.
They added, until investors got a better handle on the earnings after some firms cut their revenue and profit estimates for Facebook in the days before the IPO, visibility was limited as to what the stock's price should be.