Because they have no business plan, and because they have a ton of lawsuits against them. Facebook had their IPO after they were already worth billions of dollars so they had no room to grow. People are starting to realize that and they're bailing on the stocks.
Mark Zuckerburg admitted that he did not focus on making money. His mission for Facebook was to make the world open. His own statement… “The thing I really care about is the mission; making the world open.”
Investors want a return on their investment, so why own stock in a company that is not working towards that goal?
Stocks are only worth so much a share depending on the value of the business. When you multiply the stock price by how many shares there are you get the company's Market Cap, which is what you could buy the company for if you could get your hands on all the stock at that price.
This value should closely reflect a mix of the following: What someone would buy the company for if it had a sale sign on the front door, what the company is making in profit and what the company is paying in dividends, plus any sum of money on top for the prospect of all these ingredients going forwards.
Of course that doesn’t necessarily equate to the share price, which is what investors try to make money out of.
Facebook is valued like a superstar. If you took the way Exxon is valued and applied it to Facebook it would be worth a few cents a share. Even if you put it up against Google or Apple you would be hard pressed to see the stock over $10. Facebook was floated at an amazingly high price because its brokers sold the initial investors a dream that Facebook was the most amazing company in history. That dream is tarnishing so its stock price is cratering.
You only have to look at the dotcom boom -1995-2000 - to see how this story goes. But wait, many dotcoms had a rough start and then shot to the moon before collapsing back again. This is not a simple story, which in itself is another reason to steer clear. Never ever invest in a stock story you don’t understand because that’s a game you will always lose.
by shaunese7 years ago
What are good, cheap stocks to purchase for the beginner?I want purchase cheap stocks in a stem cell research company... what should I look for?
by irenev178 years ago
mean buying stock in a band or writer, photographer, even a filmmaker. Not in the traditional 'fund-raiser' sense, but actual shares of digital media.
by ngureco7 years ago
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by TimTurner6 years ago
The stock market has risen about 15% in the last 3 months and about 80% in the last 8 months. Seriously?We are still losing close to 200,000 jobs a month and small businesses are hurting. The economic data...
by Ramsa15 years ago
In my latest Hub written and posted a day before Facebook went public, I gave five reasons why I would not buy FB stock. And in one of my comments I predicted that the stock would be at around $25 in six months. Well,...
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