Facebook shares close at new low

(CBS/AP) NEW YORK - The unofficial start of summer this week failed to ignite Facebook (FB) shares.

The social networker's stock sank as low as $28.65 Tuesday before closing at $28.84, down $3.07, or 9.6 percent. That's down roughly 24 percent since the social  networking service's initial public offering earlier this month, the largest ever IPO by an Internet company.

Facebook began trading publicly on May 18 following one of the most anticipated stock offerings in history. The stock priced at $38 a day before the company's public debut. The company's market capitalization has since decreased $25 billion in its first seven of trading.

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But the launch was from far from smooth. The stock's public debut was marred by technical glitches at the Nasdaq Stock Market that delayed trading. And the company, along with the investment banks that led the IPO, is the subject of shareholder lawsuits.

The investors allege that analysts at the the investment banks, including lead underwriter Morgan Stanley (MS), cut their financial forecasts for Facebook just before the IPO and told only a handful of clients. Morgan Stanley has declined to comment. Facebook calls the lawsuits "without merit."

Wedbush analyst Michael Pachter said that Facebook's stock has been hurt by what he called "near-term issues" that include the Nasdaq glitches, an oversupply of stock that was being offered, and the allegations of selective information disclosure. But he rates the stock "Outperform" and has a 12-month target price of $44.

"Facebook has built a huge moat between it and its competitors, and we endorse Mr. Zuckerberg's mission," he wrote in a note to investors Tuesday, referring to Facebook CEO and founder Mark Zuckerberg.

With the latest drop, Facebook's value is about $79 billion.

The downdraft in Facebook shares also appears to be casting a cloud over other publicly traded social-media companies. The stock price of online gaming company Zynga (ZNGA), which derives most of its revenue from Facebook, fell 7.9 percent Tuesday and is down nearly 15 percent since the social networking giant's IPO.