Facebook Stock Falls Again, Moves Closer to Circling the Drain

Paul Lilly

You don't need to pity Mark Zuckerberg, the billionaire whiz kid who may have gotten himself in over his head when taking the world's largest social playground to the stock market. As in, way over his head. He'll be okay. But that $38 IPO price, which was supposed to be just the beginning of a much, much higher number? It seems like a distant memory just four short months later. For one reason or another, Facebook's share price keeps moving further away from its IPO price, having started the week off by dropping more than 9.1 percent to $20.79 on Monday. Today it's down slightly more, and some are saying it could fall to $15.

Even at the reduced price, Barron's still considers Facebook shares to be "too pricey" based, in part, on "uncertainty about the outlook for its business grows." The problem, says Barron's, is that Facebook is trading at 47 times its projected profit for 2012. Google and Apple, meanwhile, both trade for around 16 times their estimated 2012 earnings.

Perhaps Zuckerberg and company had a distorted perspective of just how much Facebook was worth in the first place, but that's not the only problem. The company continually shoots itself in the foot with bad publicity. On Monday, for example, it was reported Facebook was accidentally posting users' old direct messages on their Timeline. That wasn't actually the case. Instead, users were confused over the layout of the new Timeline feature, which led to the confusion over what they were seeing. Facebook wasn't in the wrong in any way, but it has insisted on making the Timeline feature mandatory.

Despite the falling stock price, not everyone agrees that Facebook's IPO was a failure. Barry Diller, chairmain of IAC/Interactive, told CNBC that Facebook did what it was supposed to do, which is to get as high a price as it can the company's stock.

"If you're going to sell stock and somebody wants to buy it at a price and that price is not a price you dictate, but demand dictates, sell it to them now," he said in reference to Facebook's IPO price.

The problem is, as time goes on, demand dictates that Facebook is worth less and less.

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