Overheated Facebook Stock Settles Down

All of the excitement over the public offering of Facebook stock seems to settling down with many investors by Monday. The stock debuted on Friday at $38 a share, but today shareholders only have a $33.97 stock, as the stock lost more than $4 a share in value. In addition, just before Facebook stock went public last week, GM decided to pull their ads from the social network as they discovered that the cost of the ads were actually driving very few sales of new vehicles for the company.

The question here is whether more advertisers decide that Facebook isn’t worth the cost of advertising, and whether the stock further declines in value in the next few days. Will their be a type of snowball effect here? Could the stock actually settle into the $20-$26 dollar range within days?

Sometimes overheated stock issues create more excitement than they really should. And some investors are a little poorer today for letting their emotions get in the way of more careful investing. So far the story with Facebook is not to get too excited about stocks, and always to invest carefully and with lots of caution.

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