Investors have spoken, and there is not much to "like" about Facebook.
Despite the fanfare around last week's US$16 billion initial public offering, Facebook's share price had sunk by 18 per cent by the close of trading on Tuesday.
Yesterday, the stock was showing a little more promise, trading at $32.28, and up a little more than 4 per cent from its previous close.
The social-media site is now chasing advertising revenue in developing markets - it is about to open an office in Dubai - although analysts are still sceptical about whether its $104bn initial valuation was justified.
Ibrahim Masood, a director and senior investment officer for asset management at Mashreq, said Facebook's stock had failed to perform in an otherwise buoyant market. "They were probably a bit too aggressive on the pricing side, so I think that is getting reflected in the issue not doing well," said Mr Masood. "Over the last couple of days, the market has actually come back, but Facebook is still down."
Shares in Facebook were sold for $38 at its flotation - but closed at $31 on Tuesday.
Some investors have voiced concerns that the price for Facebook was set too high and that too many shares were sold to the public.
Investors have threatened legal action over the IPO, with one having sued the Nasdaq, on which Facebook shares are listed, for alleged negligence over its handling of the process.
Analysts at the lead underwriter, Morgan Stanley, unexpectedly cut their revenue forecasts for Facebook in the days before the IPO, although it was not clear how widely this was made known, according to Reuters.
Facebook made a profit of $1bn on $3.71bn in revenues last year. Mr Masood said the valuation of Facebook at its IPO was based on "really optimistic forecasts" over future earnings.
In an attempt to boost its revenues from the Middle East, Facebook is expected to open its office in Dubai next week, where it will sell advertising to clients across the region.
Despite wider global concerns, Mr Masood said that the Middle East could be a strong market for Facebook in the future.
"Opening an office here is probably a bit of an experiment for Facebook at this stage. But I wouldn't be surprised if it turns into something significant pretty soon," he said.
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