Facebook Stock Begins Its Rebound!
In the course of a company’s stock, there is a natural movement; no goes constantly up. It is perfectly natural for stock values to rise and fall based on any number of a multitude of factors. Yet, within the last twenty years, there has been an unrealistic expectation that tech sector stocks will go homogenously upward, even though there is ample evidence to prove that the stock market, especially as it pertains to the tech sector, is far more volatile. Perhaps no tech sector company offered stock with more expectations and more difficulty in recent memory than Facebook.
Facebook made its initial public offering of stock earlier this year at $38/share. After a momentary bump as the initial shares were bought up, the stock value took a nosedive. Facebook stock bottomed out at $25.50, which caused not only grave concern from investors, but led some investing groups to activate provisions in the IPO that compelled key investors to pay for speculated shares above the current (at that time) market value of the stock. Even for a tech sector IPO, Facebook stock took some early, brutal punches that left many investors frustrated and angry.
The news is not all bad for investors, though. Near the end of last week, Facebook investors got the reversal in the decline of stock prices that they had been waiting for. Steadily rising in value over the course of the week, Facebook stock closed Friday at $33.05/share. As Facebook stock climbs closer toward its original $38/share – and hopefully starts making steady gains thereafter – the company’s value will once again approach the $100 billion valuation that its original price represented (Facebook is currently worth approximately $71 billion dollars with its stock price so deflated).
Facebook’s rebound is credited, in part, to its positive relationship with Zynga, whose stock has also been going up. Facebook and Zynga have a close relationship and their new advertising venture appears to be paying off for both companies. The improvement in Facebook’s stock price could also signal an important shift in investor confidence. Facebook’s initial public stock offering was plagued with problems, including NASDAQ computer failures the day of the stock launch that made it difficult for investors to buy and sell shares. Belief in Facebook CEO Mark Zuckerberg’s assertions that Facebook complied with all documentation requirements prior to the IPO could be improving investor confidence in the company and driving the stock price back up.
Stocks will naturally rise and fall and Facebook’s investors have been waiting for the stock to go up. With the value trending up in advance of the Second Quarter earnings report, this might be the week Facebook investors get their wish!
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