facebook is losing money

The most anticipated initial public offering in years has also turned out to be the most disastrous. Trouble began almost immediately for Facebook on May 18, when its first day of trading was delayed by half an hour due to technical glitches on the Nasdaq exchange. Problems continued throughout the day as the system was overloaded with requests. Some investors weren’t even sure if their orders had been executed. It later emerged that analysts at Facebook’s underwriters revised their growth targets to reflect weaker advertising revenue, but didn’t properly disclose the revisions to clients before the IPO. Dozens of lawsuits against Facebook, its underwriters and the Nasdaq ensued. It probably wasn’t the debut Facebook founder and CEO Mark Zuckerberg wanted.
But what’s worse than the immediate IPO fallout is Facebook’s current share price. As of the end of November, Facebook was trading at $27—since the IPO it has lost 28% of its value. The company isn’t alone. A general gloom descended over other social-media companies this year. Daily-deal pioneer Groupon and social-gaming firm Zynga, which both achieved big valuations based on little more than high expectations, are tanking. The problems facing each company are unique—Groupon is suffering from high marketing costs, while the popularity of Zynga’s games is waning—but it became painfully apparent this year that social-media hype isn’t selling like it once did.