Daily Archives: June 3, 2012

The feeble showing of Facebook’s stock in the weeks since its $16bn initial public offering has left people casting about for explanations. Maybe Morgan Stanley, which organised the IPO, got complacent. Maybe Facebook neglected to adapt its platform fully to the world of mobile devices. Maybe, if we are to believe the Los Angeles Times, the company, for all its 900m users, is “losing its cool”. Those explanations are wrong. There may be a simpler explanation: political risk.

 

Facebook’s second full week of trading ended just as dismally as the first, and it wasn’t the only one that was ailing. Tech stocks across the board, from Zynga to Groupon, were down. While this was partly a result of a broader market decline, doubts about social media’s money-making potential have taken hold on Wall Street.