Facebook Plunge ‘Actually Isn’t That Surprising’: Pro
By: Katie Little | News Associate
Shocked by Facebook’s 60-percent plunge since its initial public offering? Don’t be, says one market pro.
“Almost every Internet IPO over the last 18 months has traded off materially from its IPO price into its lockup expiration,” said Mark Mahaney, an analyst at Citigroup. “What you’re seeing out of Facebook actually isn’t that surprising given what’s happened to the other stocks.”
Many of these stocks debuted with very high valuations due to enormous public interest, Mahaney told CNBC’s “Squawk Box.” Pricing such a high level of public interest into the stock is “very hard” to do, he added.
“For investors, we’re not buyers here,” Mahaney said.
Citigroup has maintained a “hold” rating on Facebook's shares since it initiated coverage.
Mahaney said the company needs to show reacceleration in revenue growth. He added that a drop in its stock price to the mid-teens would be “really obvious as a discount to its growth rate” and could take out a lot of the stock’s risk.
“There have been one or two interesting outperformers since their IPO — but only one or two,” he said. Zillowand Yelp are two examples of these outperformers, Mahaney said.
“We like Zillow as a stock,” he said.
Mahaney said he also upgraded LinkedIn’s shares following its lockup expirations.
—By CNBC.com’s Katie Little; Follow Her on Twitter @katie_little
Additional News: The Man Behind Facebook’s IPO Debacle
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Disclosures:
Disclosure information was not available for Mark Mahaney.
