Hot stock to watch: Facebook (FB) stock price plunged as much as 6.7% in the trading session on Tuesday, hitting a new low since its IPO. Facebook stock price has declined for three days in a row after its release of the second-quarter earnings report. The financial results showed that, the growth of Facebook in the second quarter slowed down.
In today’s trading, Facebook stock price declined $1.44, to end at $21.71, a decrease of 6.22% in the regular trading on the Nasdaq. The stock traded as low as $21.61 in the trading session, this is the lowest trading price since Facebook IPO on May 18, 2012. Based on the lowest level of price, Facebook stock price has accumulatively lost 43% by comparison to its IPO price of $38 and declined more than half by comparison to the first trading day high of $45.
Facebook last week reported the company’s second-quarter sales grew 32 percent compared to a year ago, but lower than the first quarter’s increase of 45%. Facebook did not provide the guidance for the current fiscal year revenues and earnings, disappointing the investors. In addition, Facebook’s user base growth has slowed down, and investors are worried about the development of this company’s mobile advertising business.
Facebook issued its second quarter revenue of $1.18 billion, exceeding the average analyst estimate of $1.16 billion; operating margin declined over the same period last year; the payment business revenue was $192 million, lower than the average analyst estimate of $199.3 million.
In the next few months, Facebook stock price is likely to continue to decline as the lock-up period will expire. The lock-up period has prohibited the insiders from selling the company’s stock for a certain period after the IPO. Only in August, there will be an addition of more than 200 million shares entering the secondary market. This may weigh on Facebook stock price. Read more: Facebook outstanding shares will add to 19.9 mln.
Facebook grew its revenues more slowly than the user base, because of the boost in the mobile users. Last quarter, Facebook saw an increase of 10% in the average daily user number, but its delivery advertisements in the US market still declined more than 2%.