Facebook silver lining on another rough day: stock stops sinking
Congress is getting involved and investors have become angry, but despite another rough day for Facebook at least its stock price finally closed with a daily gain.
After closing at $31 Tuesday, Facebook’s stock ended up with a $1 gain Wednesday, closing at $32.
It was good news for the company, which had seen its stock sink further after each of its first three days of trading, but it appeared to be the only good news Wednesday for the social networking giant.
The company and its IPO underwriters were hit with a class-action lawsuit filed Wednesday. The suit alleges Facebook and the banks involved misled shareholders about revenue projections, causing them to lose money.
The suit contends the social network’s prospectus and registration statement had false information. Facebook plans on fighting the suit.
“We believe the lawsuit is without merit and will defend ourselves vigorously,†said Andrew Noyes, a Facebook spokesman.
If a class-action lawsuit wasn’t enough, Congress is also getting involved.
Both a Senate and a House committee have begun inquiries into the problems that plagued Facebook’s IPO.
Neither the Senate Banking Committee nor the House Financial Services Committee have launched official investigations or scheduled hearings but they have begun gathering information.
Welcome to the big leagues, Facebook.
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