Here’s Why Facebook Had a Horrible Start to the Week

After seeing something of a rally in the last month, shares of Facebook (NASDAQ:FB) lost over 9 percent on Monday, and Barron’s may be to blame. The popular stock newspaper ran a cover story suggesting the stock is only worth $15 causing a frenzy over the weekend.

After Facebook’s infamous 40 percent post-IPO crash, the company has seen some faith return of late as CEO Mark Zuckerberg pointed toward mobile and improved advertising services. So far, Facebook Exchange and Facebook Offers look like steps in the right direction, but Andrew Bary writes in the article that “success in mobile is no sure thing.”

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Apple (NASDAQ:AAPL) and Google (NASDAQ:GOOG) pretty much govern the mobile market. Apple has taken steps to integrate with Facebook, but it’s unlikely Google will be so friendly. Google has its own hurdles to leap with mobile advertising, and with social search indicated on the horizon, Android and Facebook might not get along. If Google can compete with Facebook in photos and messaging, like it is trying to do – and perhaps one day socially with Google+ — then native Android services could pose a threat to Facebook.

However, with almost 1 billion users and a lot of talent on its team, Facebook can afford to throw its weight around a little. What makes Facebook so interesting is the idea that it is only one or two innovations away from massive monetization. There doesn’t seem to be as much hype around the idea of Google getting to the mobile ad solution first.

Goldman Sachs lowered its price target on Facebook from $42 to $37 per share because, among earnings and expense concerns, “with the lockup ending soon, coupled with the market’s allergy to supply, we would expect the shares to remain volatile over the next few months.” But the company does maintain a “Buy” rating, as it expects Facebook to keep it together in the long run.

Most research firms currently have a “Buy” or “Outperform” rating on the stock, but the share price will likely remain volatile as the end of the lockup approaches. Investor sentiment will no doubt to a large degree determine prices until Facebook’s financials prove beyond a doubt that it can turn a profit.

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