I don’t get where people are getting this idea that Facebook is “just a fad” or “the next MySpace.” Facebook is still king of social media with regards to subscribers (over 900 million) and average time spent on a website (around 20 minutes per user).
It’s simply overvalued. A very low ad click-through rate is not helpful to a company that makes most of its money on selling ad space. $4 billion/year income is great money, but it just doesn’t lead to a $100 billion valuation.
There still isn’t anything else out there that can compete for people’s attention and time like Facebook. Google+ has promise, but it’s just not differentiated enough and, consequently, nobody’s really on it. People want to communicate, and they’ll continue to do so on Facebook until the next best thing comes around. My guess is that’ll be a long wait.
It is usually considered disappointing for a new stock to fall below its offer price so quickly, and particularly so for the most heavily traded IPO of all time.
It is usually considered normal for an IPO which is overbought and overhyped.
Give it a month or so to settle at a realistic value.