Facebook hits new low after price target cuts
NEW YORK, Aug 31 — Shares of Facebook Inc fell 4.5 per cent to a new low today after brokerages cut their price targets on the company’s shares, saying several lock-up expirations over the next year will weigh on the stock.
Early investors got the green light to sell Facebook shares for the first time on August 16, sending its stock down 6.3 per cent and prompting price target cuts.
About 243 million shares will become available for trading from mid-October, with November 14 being the big day when more than 1.2 billion shares will enter the market.
The company’s current free float is about 628 million shares.
“We expect investor attention to return to fundamentals after the technical challenges presented by lock-up expirations over the next six months have been absorbed by the stock,” BMO Capital Markets analysts said in a note.
They added that Wall Street sentiment on Facebook is now much worse than advertiser sentiment.
The brokerage cut its price target by US$10 to US$15, 60 per cent below the price at which the company’s stock started trading on May 18.
Media reports said BofA Merrill Lynch, an underwriter to the IPO, cut its price target by US$12 to US$23.
The company’s shares fell to US$18.23 on the Nasdaq today amid heavy trading.
Shares of game publisher Zynga Inc, which gets most of its revenue from Facebook, slipped 3 per cent on the Nasdaq. — Reuters