Facebook shares drop under $29

Published:  30 May at 6 PM

For the first time since its flotation, shares in Facebook have dropped below $29 to a new low. Less than two weeks ago, the shares were launched at $38 during its high-profile flotation, which placed the firm at $104 billion (£66 billion) in value.

Ever since then, Facebook's stakes have lost nearly one-quarter of their value. Russia's largest social network, VKontakte, postponed the launch of its stock market, fearing a repetition of Facebook's issues.

CEO Pavel Durov wrote in a Twitter message that the IPO of the company crushed the faith of several private investors in social networks. The shares of Facebook closed down by 9.6 percent to $28.82, a little above its low point of $28.78.

Tuesday was the first day when options on Facebook shares began trading, which is one explanation for why the shares dropped since their initial public offering.

Options, which are a type of derivative, allow bets on the direction of the stock. It seems that the majority of investors are betting that Facebook shares will go even lower.

BBC correspondent Rory Cellan-Jones says the firm’s stock market debut is dropping as one of the most tumultuous of recent years. The situation is a huge change from recent weeks, which saw the over-subscription of the eight-year-old company’s share sales.