Shares of Facebook continued to slide Tuesday, even as the broader market managed a modest gain, as fallout from the company's IPO last week continued.
The social network’s share price was lately down 3 percent, adding to a decline of 11 percent seen in Monday's session. Facebook is now down 27 percent from Friday's intra-day high of $45 a share. (Track Facebook's stock price here.)
Facebook's market debut on Friday 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 it does little for Facebook, whose lead underwriter Morgan Stanley had to step in and defend the $38 offering price on the open market.
Facebook, its investment bankers and the Nasdaq market have come under fire for not making sure one of the most anticipated market offerings in recent memory happened smoothly.
When a stock falls below its offer price so soon after an IPO it is considered a disappointment for the company, particularly when the IPO is the most heavily traded ever and concerns such a high profile company.
A number of reasons for the stock decline have been offered by observers. Some pointed to underwriters offering too many shares, while others blamed an overly strong IPO price and worries about slowing revenue growth at the social network.
Also, Reuters reports that Facebook’s lead underwriters -- Morgan Stanley, JPMorgan and Goldman Sachs -- cut their revenue forecasts for the company in the run-up to the company’s $16 billion IPO.
Related: Blame game begins after Facebook debacle
The broader market was edging higher Tuesday amid news that Japan's sovereign rating was cut by Fitch as a political stalemate dimmed chances the country could curb its snowballing debt.
Fitch lowered Japan's long-term foreign currency rating to A plus from AA. It cut the local currency rating to A plus from AA minus. Both were cut with a negative outlook.
The United States and Japan are leading a fragile economic recovery among developed countries that could be blown off course if the euro zone fails to contain the damage from its problem debtor states, the OECD said on Tuesday.
Nasdaq OMX faces short-term costs from its botched handling of Facebook shares on their first day of trading on Friday, but longer-term repercussions could be more expensive as it struggles to restore its image.
Initially, the exchange said it planned to set aside $13 million to resolve bad trades; even if all of that was used, the cost would be minimal compared with the $387 million in net income it reported last year.
China will fast track approvals for infrastructure investment to combat a slowdown in the economy, a state-backed newspaper reported on Tuesday, underlining a call by Premier Wen Jiabao for policies to maintain growth.
Stocks rose more than 1 percent on Monday, with the S&P 500 snapping a six-day losing streak, as equities rebounded from their biggest weekly drop in almost six months.
Reuters contributed to this report.
