Facebook's stock drop continues Friday, makes new low - USA TODAY

By Matt Krantz, USA TODAY

Updated

Facebook's pains as a newly public company continued Friday as shares dropped to a new low following signs that the company's growth continues to slow.

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  By Richard Drew, AP

  The Nasdaq MarketSite in New York's Times Square welcomes the Facebook IPO on May 18, 2012, its first day of trading.

By Richard Drew, AP

The Nasdaq MarketSite in New York's Times Square welcomes the Facebook IPO on May 18, 2012, its first day of trading.

Shares of the No. 1 social networking company fell as much as 14% to $22.28, which not only notched a new low but also marked a nearly 40% decline from the company's initial public offering price.

Shares suffered following the company's first earnings report as a public company late Thursday. That report showed a dramatic slowdown in growth, despite meeting Wall Street estimates.

Revenue grew 32% in the second quarter, down from nearly 45% growth in the first quarter. Meanwhile, costs during the second quarter jumped 295%.

Facebook continues to be a glaring example of a poorly performing IPO.

So far this year, of 83 IPOs to start trading, just 29, including Facebook, are down from their IPO prices, says IPOScoop.com. Fifty-two IPOs are higher. Still, IPOs are struggling as a group. The FTSE Renaissance U.S. IPO Index, which tracks the performance of recent IPOs, is down 0.2% this year.

Despite the stock's woes, Facebook is far from the worst IPO ever in its first 49 trading days.

Internet-based phone service Vonage plunged 62% from its $17 IPO share price on May 23, 2006. Still, Facebook's decline is dramatic. "It's going from bad to worse," says John Fitzgibbon of IPOScoop.com. "It's been a trainwreck from the start."

The stock's vicious downdraft, despite the fact the company is still growing, highlights the "disconnect between the stock and the company," Fitzgibbon says.

Given Facebook's stature in the emerging field of social networking, investors are expecting more. Additionally, investors fear the rise of mobile networking, which is less profitable than the Web for Facebook, will be a drag into the future.

Facebook "reported results that were modestly ahead of our expectations; however, the (conference) call lacked granularity around," according to a report by Anthony DiClemente of Barclays. He lowered his 12-month price target on the stock to $31 a share from $35.

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