Reuters: Global Markets: Facebook shares drop after Barron's snub

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Facebook shares drop after Barron's snub Sep 24th 2012, 17:20 Tweet Share this Email Print Related News Exclusive: Facebook to charge merchants to run offers Thu, Sep 20 2012 Facebook CEO dangles search and mobile, shares rally Wed, Sep 12 2012 Wall Street treads water, stays on ECB watch Wed, Sep 5 2012 Facebook rules out share sale to cover tax bill Wed, Sep 5 2012 Facebook hits new low after price target cuts Fri, Aug 31 2012 Analysis & Opinion Obama may find an exceptional friend in Facebook The Facebook investors' lament Related Topics Tech » Hot Stocks » Asian Markets » Media » Facebook » The Facebook logo is displayed on a computer screen in Brussels April 21, 2010. Credit: Reuters/Thierry Roge By Gerry Shih SAN FRANCISCO | Mon Sep 24, 2012 1:20pm EDT SAN FRANCISCO (Reuters) - Facebook shares dropped on Monday after financial weekly Barron's questioned the social networking company's value and priced its stock at just $15. Facebook's shares slid 10 percent to $20.64 in mid-day trade on Nasdaq, about 46 percent off of its $38 IPO price in May. The decline shed most of its gains from the previous week, when shares were boosted by news that the company was testing a new mobile advertising network. "Is the stock a buy? The short answer is 'No,'" Andrew Bary wrote in the latest edition of Barron's over the weekend. "The stock trades at high multiples of both sales and earnings, even as uncertainty about the outlook for its business grows." At $15, Facebook would still be richly valued at 24 times its projected 2013 profit. That's compared to established tech giants Apple and Google, which both now trade for about 16 times their 2012 earnings, Barron's argued. Aside from the No. 1 social network's struggle to adapt to the rise of mobile devices, Barron's also highlighted Facebook's stock compensation costs, which have ballooned as the company fights to hold onto its employees by dangling more shares. Barron's estimated that Facebook's restricted-stock issues were "so large last year that it may have exceeded its cash compensation costs." "CEO Mark Zuckerberg seems to have a cavalier attitude" about stock compensation, Barron's wrote, because of the company's policy of granting more shares to employees to make up for its declining stock price. (Reporting By Gerry Shih; Editing by Bernard Orr) Related Quotes and News Company Price Related News Tweet this Link this Share this Digg this Email Reprints We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/ Comments (0) Be the first to comment on reuters.com. Add yours using the box above.

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