Facebook’s stock prices are getting lower and lower

By: Mihir Palan

Everyday, companies are going to the stock market to gain some money. On Friday, May 18, Facebook went into public hoping to gain a good amount of money. Unfortunately, the prices are decreasing.  

Facebook’s prices continue to go to down. It went down 10% on Tuesday, May 29, from $38 to $27. It was the third consecutive day that the prices decreased. About 62 hours ago, before this all happened, Facebook was going to buy company Instagram to help their popularity. It costs 980 million dollars. If the prices keep going down, then the price for Instagram will also decrease because it is going bankrupt and they desperately need a buyer. At the start of the month, this was worth an 1 billion acquisition, meaning that the facebook stock price would be $30.49 per share. There is some pressure of Facebook through, if they cannot be able to buy the deal, then they would have to pay 200 million for not being able to succeed the deal.

Why is Facebook’s stock prices going down? Well, for starters company NASDAQ started trading an half hour later from the IPO and then mismanaging the processing of orders. It was also the exchange glitch of the Wall Streets, costing them millions of dollars. And the last mistake is that Facebook is facing a lawsuit because they were sharing negative comments about the IPO to the institutional adviser. Thanks to these mistakes, the market value dropped from 104 billion dollars to 60 billion dollars, a 44 billion dollar decrease. However, not all the blame should go to facebook, the Facebook Century really is what deserves the thumbs down. They made the price too high for the for the market to bear.

There were many people disappointed, for example student Nick D said “Prices should be going up because Facebook is really public and almost everyone uses it.” Other classmate Aiden W also said that “it is disappointing, the prices are supposed to get bigger, not smaller.” There were some people that actually weren’t surprised at the recent decreasing of the stock prices. Joseph Treman said “I am not surprised because I think they(Facebook) set the price too high.” His answer is probably the best answer to describe the failure.

    All the other companies that recently joined the stock market have been doing pretty good, Linkedin, Yelp and Zynga all have had a an increase of 3.5 income percentage (data recorded last Wednesday). But now one of Facebook’s partners, Zynga, is also failing thanks to the recent failures of Facebook. They ended Friday with their lowest price, $27.72.

Facebook has been struggling to make money from users because many are creating statuses on their phones instead of the computer. There is also a fear that Zynga might surpass them to make more money and keep it for themselves. Furthermore, as The Wall Street Journal points out, “Facebook receives a disproportionate amount of revenue from Zynga and other game developers. That works just fine on the desktop. But on smartphones and tablets, Facebook hasn't yet managed to create a platform that will lure those developers into essentially residing within Facebook, rather than writing their own apps for OS and Android and keeping all the revenue. One does not launch Facebook's mobile app to play games like "Angry Birds," and it looks like this won't be the case for several years.” This is true, if Facebook doesn't get the money or popularity, it won't last long in the stock market.

Mihir Palan
Media lit 7
Word Count: 607