Why Facebook Got Crushed

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of freshly public social network Facebook (NAS: FB) have dropped by as much as 14% today, following its historic and potentially overhyped IPO on Friday.

So what: After the IPO priced at $38, shares had popped upward of 18% within the first minute of trading. Today, shares have touched as low as $33, or 13% below the offer price -- and on a broad-market rally day, no less. There's no shortage of well-deserved skepticism over Facebook's lofty valuation, and it seems the IPO glow is fading quickly.


Now what: Other social-media stocks are also falling in lockstep with Facebook's plunge, including social gamer Zynga (NAS: ZNGA) , down 11% at the low, and Renren (NYS: RENN) , down 15% at the low, among others. After seeing social media as one of the most sought-after sectors in tech for the past year, investors may be sobering up to the possibility that Facebook isn't all it's chalked up to be -- especially at these prices.

Interested in more info on Facebook? Add it to your watchlist by clicking here.

At the time this article was published Fool contributor Evan Niu holds no position in any company mentioned. Click here to see his holdings and a short bio. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

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