Facebook shares close 11% below flotation price
Shares in Facebook closed well below the price at which they were floated amid doubts that the newly-listed company can live up to expectations.
The shares debuted on the Nasdaq stock exchange at $38 each on Friday, but ended 11% down on Monday.
Some analysts said the shares would have fallen on Friday had not underwriters stepped in to buy stock.
Critics say Facebook's advisers have set the price too high, although others argue that it is too early to tell.
The company's shares fell about 12% immediately the Nasdaq opened, and hovered around 9%-10% down for most of the day until a late bout of selling.
Facebook's offer price on Friday valued the social network at $104bn (£66bn).
One US-based analyst told the BBC that this valuation was too high. "The market is just not valuing what Facebook has to bring to the table," said Patrick Moorhead, analyst at Moor Insights & Strategy.
However, BTIG, the US-based global stockbroker, said it was too early to judge Facebook. "Valuing Facebook is more art than science at this stage of its development and the current state of both social and mobile advertising," the firm said in a statement.
The firm said it had confidence in Facebook's long-term advertising prospects, forecasting that advertising revenues will rise to $8 billion in 2015 compared with an estimated $4bn for 2012.
Strong demand in the run-up to the flotation had led the company to increase both the price and the number of shares available for sale.
Mr Moorhead said that meant the Initial Public Offering (IPO) had been a success for Facebook's founders and early investors. Some of them managed to sell parts of their stakes for hundreds of millions of dollars.
But he said the share price fall could have long-term consequences for the world's biggest social network.
"The challenge is this will sully the long-term brand of Facebook, and in five years time people will look back on the IPO and have a negative connotation and none of that is good for the Facebook brand and the Facebook service itself," Mr Moorhead told BBC World.
Other internet companies have had mixed experiences recently when they have started selling shares.
Shares in business networking site LinkedIn more than doubled from their $45 offer price on their debut in May 2011. They peaked at $117 and are now trading around the $100 level.
Discount voucher firm Groupon's shares jumped 30% on their debut in November. But they are now at about $12, well below their $20 flotation price.
Online games maker Zynga's shares fell 5% on their first day of trading in December 2011. They are currently around $7, below their $10 offer price.
Google, however, is the star performer of the technology IPOs. Launched in 2004 at $85 a share, it is now trading above $600. It has yet to regain its pre-financial crisis peak of over $740, hit in 2007.
The start of trading in Facebook shares on Friday, one of the most high profile stock market IPOs in recent years, was delayed by technical problems on the Nasdaq stock exchange.
Nasdaq boss Robert Greifeld said he was "humbly embarrassed" by the glitch.
Trading was delayed by about 30 minutes due to late order cancellations, and the shares closed on Friday at $38.23, having hit $45 earlier in the day.
"This was not our finest hour," said Mr Greifeld. As a result of the glitch, a number of investors were unsure whether their buy and sell orders had actually gone through.
However, Mr Greifeld said that once the glitch had been fixed, trading had been "successful".
More than 566 million shares in the company changed hands, a record volume for US market debuts.