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Facebook Shares At A Record Low

Max ‘Beast from the East’ Smolaks covers open source, public sector, startups and technology of the future at TechWeekEurope.

If you find him looking lost on the streets of London, feed him coffee and sugar.

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The social network has lost 40 percent of its value since IPO

On Tuesday, Facebook’s shares hit yet another record low, losing 6.2 percent of value at the close of trading.

The shares are now worth $21.71, (£13.9) over 40 percent down compared to their $38-per-share (£24.3) Initial Public Offering (IPO) price.

This was the third day in a row the social network lost value, following a damning analyst report and the issue of fake accounts being discussed in the media.

Meanwhile, Swiss bank UBS has threatened to sue the Nasdaq stock exchange operator, blaming it for a £228.7 million loss incurred as a result of Facebook’s botched IPO.

The blame game

On 18 May, Facebook became the first American company to debut on the stock exchange with a value of more than $100 billion. The stock launch itself was plagued by technical problems and many investors have claimed the shares were overvalued.

Lead underwriter of the IPO Morgan Stanley later came under fire for selective disclosure of important information that might have given an advantage to institutional investors.

According to Reuters, Facebook offered no outlook or forecast for the year when reporting its quarterly results last week, disappointing investors who had hoped for affirmation of its growth prospects.

Facebook is also looking at a potential deluge of up to 211 million shares which could hit the market after 16 August, when the social network’s employees will be able to sell their company-awarded stock certificates for the first time.

The poor financial performance of Mark Zuckerburg’s firm has influenced the value of many Facebook-dependant businesses, such as the game developer Zynga, which also saw its shares sink to an all-time low on Tuesday.

In the meantime, Swiss bank UBS blamed a 349 million Swiss franc (£228.7m) loss from Facebook’s botched debut on exchange operator Nasdaq, reports Forbes.

UBS said buying orders had been entered multiple times due to a systems failure, which resulted in the bank being oversupplied with shares.

According to the Wall Street Journal, UBS received about 40 million Facebook shares, instead of the 800,000 it wanted. The bank was then forced to quickly sell the unwanted stock at losses of $8 or $9 apiece. UBS has said it plans to take legal action against the exchange operator, aimed at fully recouping its losses.

While Nasdaq has acknowledged that it failed to send order confirmations to brokers for almost three hours during the day of the Facebook IPO, the agreements it signs with every trader could protect it from a lawsuit. Previously, the exchange operator had announced it had set aside $13.7 million (£8.85m) to compensate for traders’ losses, which later grew to $62 million (£40.3m).

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