Facebook's vastly anticipated IPO (Initial Public Offering) on the stock market caused a lot of buzz amongst people who normally don't purchase stocks. Fans of Facebook were lining up at virtual stock trading companies to plunk down their $38 (or some multiplier thereof) to get themselves a share of Facebook's stock offering.
On the first day of trading the price quickly went up to $42 but by the end of first day was back down to $38.23 and would have fallen farther except the powers-that-be froze the stock price.
However since then it has been revealed the owners of Facebook may have committed fraud by lying about their profits, increasing the number of stocks by 25% and inflating the price of $25 by 52% to $38.
In reality the increased number of stocks also decreases their real value. Thus Facebook stocks are really only worth about $18.75... or less.
Why less? Several reasons. #1. Facebook has been lying about its profits. #2. Facebook doesn't have a strong history of profits. Yes, Facebook does sell advertising (and game credits) for a profit, but its overhead is still significant.
Today Facebook's stock price fell to $32, down $6 from its IPO price. The price is expected to continue to fall.
Facebook is now facing a class action lawsuit by stockholders who want their money back and say they were defrauded by false claims of profitability.
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