Facebook Gets Tepid Welcome on Wall Street

PHOTO: Mark Zuckerberg, founder of Facebook, participates in a discussion during the World Economic Forum in Davos, Switzerland, Jan. 25, 2007.

Wall Street analysts gave Facebook a lukewarm reception on the first day they were allowed to publicly issue their views of the company's stock.

Nearly six weeks after Facebook's flop of an IPO, at least 17 firms revealed a mostly tepid assessment of the social-network giant's shares Wednesday.

On average, analysts at the banks behind the IPO estimated the value of Facebook shares to be just under their $38 debut. Goldman Sachs valued the shares at $42, while analysts at JP Morgan Chase recommended a target of $45.

But those endorsements did little to lure investors on a day when the U.S. stock market ticked upward as a whole. Facebook stock fell to $32.23 Wednesday, down about 3 percent from yesterday. The shares had fallen more than 30 percent to $25 shortly after their disastrous debut, though they have regained some of that ground.

The lowest estimate, $25, came from Daniel Salmon, a research analyst at BMO Capital, who cited concerns about the pace of the social network's user growth. That was about how much shares sold for at their ebb in early June, though they hit $42 just hours after the May 18 IPO.

Analysts at Facebook's main underwriter, Morgan Stanley, recommended the same price Wall Street fixed for the shares when they first started selling, arguing in a report released Wednesday that the network's mobile transition will reap benefits in the long run.

"We view Facebook as a valuable long-term asset that has been penalized by a negative perception of its ability to navigate a transition to mobile usage," Morgan Stanley analysts wrote in the 90-page report. "We view Facebook's mobile transition as a near-term headwind but long-term opportunity, and investors that believe in Facebook's ability to execute over the next several years may be rewarded when the mobile monetization… narrows or closes."

The title of a report by Citigroup's Mark Mahaney may be a good guide to Wall Street's current attitude toward the company, which had 901 million monthly users as of March 2012: "Easy to 'Like,' Hard to Love."

The lesson from all this? Be careful whom you "friend."

Join the Discussion
You are using an outdated version of Internet Explorer. Please click here to upgrade your browser in order to comment.
blog comments powered by Disqus
You Might Also Like...
See It, Share It
PHOTO: Firefighters rescue a woman who got stuck in a chimney in Thousand Oaks, Calif.
Ventura County Fire Department
PHOTO: Up in Ash: Mount Sinabung Erupting
Tibt Nangin/Anadolu Agency/Getty Images
PHOTO: Apple Pay is demonstrated at Apple headquarters on Oct. 16, 2014 in Cupertino, Calif.
Marcio Jose Sanchez/AP Photo
PHOTO: Defendant Jodi Arias testifies about killing Travis Alexander in 2008 during her murder trial in Phoenix, Feb. 20, 2013.
Charlie Leight/The Arizona Republic/AP Photo
PHOTO: Kim Kardashian, Kanye West, their daughter North West and Delphine Arnault attend the Givenchy show as part of the Paris Fashion Week Womenswear Spring/Summer 2015, Sept. 28, 2014 in Paris.
Bertrand Rindoff Petroff/French Select/Getty Images