More Trouble Ahead for Facebook (FB)

PUBLISHED: Aug 01 2012 @ 10:30 | Comments (0) | More info about Ed Liston

Ever since Facebook Inc. (NASDAQ:FB), the social networking giant, was publicly listed on May 17 amid all hype surrounding its potential future growth in valuation, the company’s stock has failed to live up to the expectations.

While the stock was hammered last week when Facebook announced slower sales growth rate in the second quarter compared to the first quarter, the stock slumped once again on Tuesday as the company disclosed that user growth in second quarter has also slowed down.

On Tuesday, the stock slumped another 6.2% to $21.71, its lowest value since its IPO. So far, the stock has plunged 43% from its IPO price.

Earlier, during the conference call with investors and analysts, Facebook had refrained from divulging its outlook both on sales and earnings for the full year.

More trouble seems to be in the offing for FB as the lockup period- a period in which insiders are not allowed to sell shares after the IPO- nears expiration.

According to Carlos Kirjner, an analyst at Sanford C. Bernstein & Co, as soon as the lockup period expires in August, shares in excess of 200 million are likely to enter the market. As a result, Facebook stock is expected to face more pressure in coming months.

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