NEW YORK - Facebook shares tumbled nearly 10 percent Tuesday, extending their slump after the much-hyped public offering earlier this month ran into investor skepticism about the social network.
Facebook closed with a loss of 9.68 percent at $28.82, dropping below $30 for the first time and ending down more than 24 percent from its offering price of $38 on May 18.
Jon Ogg of 24/7 Wall Street said there was "explosive" trade in Facebook on the first full day options were available.
Ogg said there appeared to be a "push and pull" among investors seeking "to pick their entry point ahead of time if they are interested in buying Facebook at lower prices."
Peter Cardillo Rockwell Global Capital attributed the latest drop to "the combination of bad press and sell options feeding on the market."
"It could be technical, since each time it is making new lows and it feeds on itself until it exhausts itself," he said.
Wedbush Securities said in a note to clients that Facebook was still reeling from a "messy" market launch which included computer glitches and concerns about selective information given out, and that "the number of shares offered overwhelmed demand."
"Despite these near-term issues, we expect dramatic long-term revenue growth," the brokerage said.
"Facebook has built a huge moat between it and its competitors, and we endorse [chief executive Mark] Zuckerberg's mission (if not his wardrobe)."
Wedbush maintained its price target of $44 a share, saying, "We think that our price target is warranted due to Facebook's huge upside potential for revenue and earnings growth."
The market action came amid reports that Facebook was preparing to launch its own mobile phone, apparently as part of a strategy to get more revenues from the mobile space.
Another report last week said Facebook was considering the acquisition of Opera, the Norwegian-based maker of browser software that is widely used on mobile devices.
A series of lawsuits have been filed against Facebook and its underwriters claiming key information about the company's outlook was withheld from investors ahead of the IPO.
In a related development, the Russian-based social network Vkontake said it was postponing its planned public offering due to the Facebook debacle.
Chief executive Pavel Durov, in a Twitter message, said that Facebook's IPO "has destroyed the faith of a lot of private investors in social networks" and that the Russian firm's offering "has now been postponed indefinitely."
The Wedbush note by analyst Michael Pachter and associates said that Facebook is under pressure but will pull out of it thanks to its "unparalleled reach."
"As Facebook enhances the user experience, we expect three things to happen: first, we think that a better experience will lead to a greater number of users," Pachter said.
"Second, we think that a better experience will lead to higher levels of engagement; and third, we think that a greater user base that spends even more time than the current user base will be an irresistible target for advertisers."
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