Facebook shares close down $4.20 in Monday trading. Facebook stock dropped so much Monday morning that 'circuit breakers' kicked in to restrict sell orders.
Facebook shares sank in the first day of trading without the full support of the company's underwriters, leaving some investors down almost 25 percent from where they were Friday and driving others to switch back to more established stocks.
Facebook's debut was beset by problems, so much so that Nasdaq said on Monday it was changing its IPO procedures. That may comfort companies considering a listing, but does little for Facebook, whose lead underwriter, Morgan Stanley, had to step in and defend the $38 offering price on the open market.
Even so, one source said Morgan Stanley's own brokers were at one point "ranting and raving" about glitches that left unclear what trades had actually been executed.
Without a fresh round of defense, Facebook shares fell $4.20 to close at $34.03 Monday. That represented a decline of 11 percent from Friday's close and 24 percent from Friday's intra-day high of $45 a share.
"At the moment it's not living up to the hype," said Frank Lesh, a futures analyst and broker at FuturePath Trading LLC in Chicago, adding that some people may have decided to hang back and buy the stock on the decline.
"Look at the valuation on it. It might have said 'buy' to a few people, but boy it was awfully rich," he said.
The drop in Facebook's share price wiped some $10 billion off of the company's market capitalization -- it became a sufficiently interesting pop culture story that even gossip website TMZ did a brief item Monday morning.
Volume was again massive on Monday, with more 167 million shares trading hands, making it by far the most active stock on the U.S. market. Nearly 581 million shares were traded on Friday.
The drop was so steep that circuit breakers kicked in a few minutes after the open to restrict short sales of the stock, according to a notice from Nasdaq.
"One of the things that we are seeing in Facebook is a lot of emotional trading, in that over the weekend much of the media coverage was negative, and that could be weighing on investors' decisions to get out of the stock," said JJ Kinahan, TD Ameritrade's chief derivatives strategist.
Shares of other one-time Internet darlings fell in lock step with Facebook before rebounding on their own merits, with Yelp , Groupon and LinkedIn all higher in the early afternoon. Zynga remained lower, though.
The news was not all bad, though, as the Nasdaq rose 2.5 percent. High-profile tech stocks rose sharply, with Apple up 5.8 percent and Amazon 2 percent higher.
FuturePath's Lesh said some investors took money out of Apple to buy Facebook, and now could be going right back in to Apple given the lackluster performance of Facebook thus far.