What: Shares of freshly public social network Facebook (Nasdaq: FB) have dropped by 11%, following its historic and potentially overhyped IPO on Friday.
So what: After the IPO priced at US$38, shares had popped upward of 18% within the first minute of trading. Overnight, shares have touched as low as US$33, or 13% below the offer price — and on a broad-market rally day, no less. There’s no shortage of well-deserved scepticism over Facebook’s lofty valuation, and it seems the IPO glow is fading quickly.
Now what: Other social-media stocks are also falling in lockstep with Facebook’s plunge, including social gamer Zynga (Nasdaq: ZNGA) , down 11% at the low, and Renren (NYSE: RENN), down 15% at the low, among others. After seeing social media as one of the most sought-after sectors in tech for the past year, investors may be sobering up to the possibility that Facebook isn’t all it’s chalked up to be — especially at these prices.
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A version of this article, written by Evan Niu, originally appeared on fool.com
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