So bad that a short-sale circuit breaker was tripped because the stock price kept falling. Circuit breakers kick in when a stock drops more than 10 percent from the previous session's closing price. On the day, Facebook fell 9.6 percent to $28.84, and since the company went public earlier this month, the stock has plunged more than 24 percent. From MarketBeat:
Investors who want to short shares borrow the stock and then sell it, betting that the price of the shares will fall and that they can buy them back at a lower price for a profit. After the rule has been triggered, traders may only sell shares short if the order price is above the best bid on the shares nationally.
Much of today's drop had a lot to do with the first day of options trading, which gives investors an opportunity to set a price upon which they would purchase the stock. This can be a more efficient process than short selling, but it's torture for current holders because it tends to drive down the price. For all the histrionics, however, keep in mind that the fundamentals have not changed over the last couple of weeks - just the emotionally fueled perceptions. Actually, some houses still have Facebook as a buy - and at 24 percent below the offering price why not?