Is Facebook’s Stock Headed to $25?

Facebook (NASDAQ:FB) shares fell to a record intraday low on Tuesday, touching $25.75 after another analyst firm decided not to back the freefalling stock this week. Sanford C. Bernstein & Co. initiated their coverage of the social network with an underperform rating and a $25 target price. The company had started trading at $38 on May 18. The shares closed at $25.87, falling 3.83 percent to what was the lowest closing price since the opening day. It has lost over 30 percent since the IPO.

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“It is difficult to argue for owning the stock today,” Bernstein’s Carlos Kirjner wrote in a research note.

Facebook has been concerned about being successfully able to adapt to the mobile platform as quickly as its users are, and then convert it into a substantial source of revenue. The company’s gains from advertising, which drives a majority of its revenue, are almost negligible for mobile. Investors will stay concerned about 2013 sales, Kirjner said. The deceleration may “prove to be a temporary setback if, over time, Facebook manages to improve monetization of its inventory, both PC- and mobile-based, and maximize the value of social advertising,” he wrote.

At the time of its IPO, Facebook’s underwriting banks led by Morgan Stanley (NYSE:MS) had set a price that valued Facebook at 107 times reported earnings in the past 12 months. The social network also increased the number of shares to be sold in the IPO by 25 percent to 421.2 million days before the offering. There has been massive criticism of both decisions since, as investor interest has stayed cool and the share price has continued to dip.

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