Facebook shares sank on Monday without the full support of the company's underwriters, leaving some investors down 25 percent from where they were Friday afternoon.
Facebook's debut was beset by problems, so much so that Nasdaq said on Monday it was changing its IPO procedures.
That may comfort companies considering a listing but does little for Facebook, whose lead underwriter Morgan Stanley had to step in and defend the $38 offering price on the open market.
Without that same level of defense, its shares fell $4.50 to $33.73 in the first 1-1/2 hours of trading. That represented a decline of 11.8 percent from Friday's close and 25 percent from the intra-day high of $45 a share.
"At the moment it's not living up to the hype," Frank Lesh, a futures analyst and broker at FuturePath Trading LLC in Chicago said, adding that some people may have decided to hang back and buy the stock on the declines.
"Look at the valuation on it. It might have said 'buy' to a few people, but boy it was awfully rich," he said.
The losses wiped some $19 billion off of the company's market capitalization—not far from what Chief Executive Mark Zuckerberg was worth personally when the stock debuted. Collectively, Facebook's owners and investors have suffered more than $11 billion in paper losses, with Zuckerberg alone losing $6.2 billion.
Volume was again massive, with more than 96 million shares trading hands by 11 a.m. EDT, making it by far the most active stock on the U.S. market. Nearly 581 million shares were traded on Friday.
"One of the things that we are seeing in Facebook is a lot of emotional trading, in that over the weekend much of the media coverage was negative, and that could be weighing on investors' decisions to get out of the stock," said JJ Kinahan, TD Ameritrade's chief derivatives strategist.
The drop was so steep that circuit breakers kicked in a few minutes after the open to restrict short sales in the stock, according to a notice from Nasdaq.
Shares in other one-time Internet darlings fell in lockstep with Facebook on Monday, with Yelp , LinkedIn and Zynga all lower at mid-morning.
The news was not all bad, though, as the Nasdaq rose 1.2 percent. High-profile tech stocks rose sharply, with Apple up 3.3 percent and Amazon 1.6 percent higher.
As the stock fell, there was a long list of questions—ranging from whether the underwriters priced the shares too high to how well prepared the Nasdaq was to handle the biggest Internet IPO ever—and few immediate answers.
"It was just a poorly done deal and it just so happens to be the biggest deal ever for Nasdaq and they pooched it, that's the bottom line here," said Joe Saluzzi, co-manager of trading at Themis Trading in Chatham, New Jersey.
Nasdaq said Monday morning the changes it was making would prevent a repeat of what happened Friday, when glitches prevented some traders from knowing for hours whether their trades had been completed.
The exchange also said it would implement procedures to accommodate orders that were not properly executed last week, which could ultimately lead to compensation for some investors.
"It doesn't instill confidence for clients. Talk about trying to convince them it isn't a casino," one Midwestern financial adviser told Reuters on Monday.
Separately, a source said Morgan Stanley's brokerage arm still had a "large number" of share orders from Friday that were not confirmed, which it was working to resolve.
A Facebook spokeswoman declined to comment on the share price issue.
But analysts said that after the initial frenzy, investors were quickly becoming cautious about the stock.
"Investors are increasingly aware of the risk embedded in the stock price. There are real concerns about growth and advertisers' frequent lack of certainty how best to use Facebook, along with rising costs and ongoing acquisition risk," said Brian Wieser at Pivotal Research Group, who has a $30 target on the stock.
"At $38, the stock is priced for perfection in a manner that implied that risks were negligible."
Facebook's market debut Friday suffered some hiccups, with trading on the Nasdaq delayed for a half hour and issues with traders' orders. The stock closed Friday just 23 cents above where it priced Thursday night, when many investors had hoped for a big first-day pop.
In a release, Nasdaq explained why the start of Facebook's trading was delayed on Friday. The company's CEOshed further light on the delay in an interview on Sunday with CNBC's Maria Bartiromo.
"After the calculation of the FB IPO Cross was completed, but before printing the opening trade, additional order modifications were received by the system, changing the auction order book," the release said.
To factor in the new book state, the system then recalculated the offer's auction. This caused further delay.
"Again, changes were received before the IPO cross could print the opening trade, which resulted in additional re-calculations," Nasdaq said. "This condition persisted, resulting in further delay of the opening print."
-AP and Reuters contributed to this report.