Facebook Inc (NASDAQ:FB) No Major Recovery Yet, Lacks Investor confidence
Shares of Facebook Inc (NASDAQ:FB) failed to show any recovery despite a fall of 27% from its IPO price of $38.
Yahoo! Inc. (NASDAQ:YHOO) and Facebook are in talks to settle their patent litigation and revive their once close relationship, AllThingsD reported yesterday. Any deal could involve a major cross-licensing of IP and deeper integration between the two sites. One possible problem is that Facebook doesn’t want to shell out huge amounts of cash.
This morning, analyst at Bernstein started coverage on the stock with an Underperform rating and set a price target of $25. It could be awhile, they say, before investors have clarity about Facebook’s ability to monetize what it has as well the impact of new opportunities.
The Company’s IPO was followed by an estimate reduction by underwriter Morgan Stanley on the revenue concerns that had surrounded the Company since almost a year after Facebook had reported a reduction in revenue growth. Following the estimate revision, investors lost all the optimism and their concern on the Company’s revenue generating concerns showed in the downside price movement since then.
The social network site was already hit by a severe blow when while in its IPO phase, GM had withdrawn its advertising from FB’s site stating it wasn’t profitable for them. FB is deep in trouble with the Company’s revenues not showing the growth in context with the growing users of the social site. Also, revenue growth has been affected by the growing use of Facebook on the mobile phones rather on the desktops.
As per reports from WSJ, Facebook is in the process of developing products that would permit children under 13 to use the social networking site under parental supervision in a move to tap a new pool of users. The company is testing some new approaches including connecting children’s accounts to their parents and controls to help parents select whom their kids could “friend,” said the newspaper article, which cited unnamed people who have spoken to Facebook executives. For now, Facebook does not allow children under 13 to use the site.
NASDAQ:FB