After Facebook went public last Friday (18 May), its share price will follow the path of AOL and Myspace and see a noticeable decline, according to analyst Peter Cox.
Cox Media principal Peter Cox said despite reports and commentary which decried Facebook's IPO as a failure because it didn't record a significant gain on the opening price of US$38, the closing price of US$38.23 was still a success.
However, he warned: “The $US38 per share price was totally overpriced in the first place. They floated it at ten times its worth.
“Facebook and Goldman Sachs were able to sell its shares to a lot of suckers. Over time, the price will absolutely drop and it will be worth a fraction of what it is now. It will go the way of AOL and Myspace.”
He said Facebook will be unable to match the growth trajectory Google has seen in its share price, currently trading at $US600 from a start of $US85 in 2004. Cox said the market was in the midst of another dotcom bubble, which will inevitably go bust.
The social media network's much-hyped initial public offering closed out on Friday in the US at $US38.23 per share, a mere 23 cent increase on its offer of $US38.00.
More than 580 million shares were traded with the company now valued, on paper, at $US104 billion. The share price hit a high of $US45 before flatlining at the end of the trading day.
Founder Mark Zuckerberg's personal wealth is said to be now $US19 billion.
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