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Facebook Inc shares slid below $29 to a new low on Tuesday as nervous investors fled the company's shares, concerned about the social network's long-term business prospects and an initial offering price that proved too rich.

Shares of the No. 1 social network fell 10 percent to an all-time low of $28.65, before recovering slightly to $29.01.

Since its market debut on May 18, the eight-year-old company has shed approximately $25 billion in value -- roughly equivalent to the market capitalization of Morgan Stanley, the lead underwriter of Facebook's IPO.

Wall Street has harbored concerns that Facebook, while boasting nearly a billion users worldwide and dominating Internet social-networking, would have difficulty translating its growing presence on smartphones and other mobile devices into revenue. Rivals Google Inc and Apple Inc are currently more dominant in the mobile arena.

The increasing urgency of Facebook's quest to monetize mobile is spurring widespread speculation over its next moves. Technology bankers say the company will benefit from tacking on mobile operating software through an acquisition of Norway's Opera, which has been on the auction block for a while.

The New York Times over the weekend also cited sources dredging up a longstanding rumor that Zuckerberg was pondering building a Facebook phone, with the new wrinkle that an easy way to acquire the hardware expertise needed was to buy troubled Research in Motion.

Analysts say apart from the challenge of earning money off smartphone and tablet users, Facebook -- which relies on advertising for the majority of its revenue -- may also find it difficult to lure large advertisers.

Days before Facebook's market debut, General Motors announced it was pulling out of paid advertising on the social network, citing Facebook's unproven track record and echoing potential concerns about the lack of evidence that advertising on Facebook yielded strong returns on investment.

"Facebook is in a transition in their business model," Walter Price, portfolio manager of the Wells Fargo Advantage Specialized Technology Fund, told Reuters Insider. "It was easy to get the first 5 to 10 percent of an advertising budget to try it on Facebook and do some brand advertising, but getting the next 5 to 10 percent, you've got to displace TV and that's a lot more difficult to do.

"Facebook still doesn't have the metrics to prove profitability and prove growth and awareness from their platform," he added.

Originally posted here:
Facebook stocks reach new low, close below $30 a share