Facebook stock near half-off price point

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Shares of the No. 1 social-networking company crumbled again Thursday, trading as low as $19.82 before closing down 84 cents at $20.04.

The once hugely hyped stock is now trading 47% below its $38-a-share offering price, which puts it on the cusp of joining a cadre other recent IPOs that have lost half or more of their value since going public within the past 12 months.

Five companies have that dubious distinction, including two others connected with social media — online game company Zynga and online coupon site Groupon, says IPOScoop.com.

The rapid meltdown of the stocks shows how investors became overly enthusiastic about social-media stocks, creating an echo of the infamous dot-com boom of 1999. "The social-media bubble is getting popped right now, which is why these stocks are getting killed," says Jim Krapfel, stock analyst at Morningstar.

Being down 50% in such a short period is by no means any kind of floor for IPOs, because many beaten-up newly public companies often fall further.

The worst-performing IPOs in their first six months of trading from 2001 to 2010 include Briazz, Printcafe, Verso Paper, Virgin Mobile and GT Solar, all of which fell more than 79% from their first-day closing prices, says Jay Ritter, professor of finance at the University of Florida. None recovered from their stumbles out of the gate.

Just 13 years after getting burned by the dot-com Internet debacle, investors did it again with social-media stocks, Krapfel says. Investors' hopes for stellar profits from the companies drove them to pay lofty prices for the stocks, Ritter says. But the earnings didn't come through. "The prices are down, and investor enthusiasm is down, as well."

Most of the IPOs that fall by 50% or more are focused on serving consumers, which is proving to be a fleeting business online, Morningstar's Krapfel says. "The business models aren't longstanding."

Social-media stock losses are nowhere near what happened in the dot-com bust. The biggest dot-com IPO bombs between 1999 and 2000 were BusyBox, Elastic Networks and CareScience, which all lost more than 90% in their first six months of trading.