Facebook shares decline 11 percent

SAN FRANCISCO – Maybe what Facebook really needs is a “buy” button.

After a lifeless opening last week, Facebook shares tumbled on their second day of trading, losing about $10 billion in market value Monday as investors questioned the company’s revenue prospects.

Shares of the Menlo Park, Calif., social network fell to as low as $33 before closing down $4.20, or 11 percent, at $34.03. It was unclear if Facebook shares got help from traders at the company’s lead underwriter, Morgan Stanley, which stepped in Friday to prop up shares just a hair above their $38 offering price.

It was a stunning setback for Facebook, whose IPO was hotly anticipated for months – and it could slow the pipeline of Web companies, including Twitter, that many expected to come to market in coming months. Facebook will now be under heavy pressure to show that it can make more money from its more than 900 million users, whether they are accessing Facebook on the Web or on mobile phones.

Monday’s sell-off renewed questions about Facebook’s lofty $93 billion market capitalization.

Facebook is trading at 59 times projected earnings for the next 12 months, versus Google at 14.

But critics blamed banks that advised Facebook on the IPO, saying it was too highly priced. Facebook added to the number of shares and raised the price just ahead of the IPO.

Facebook and Morgan Stanley declined to comment.

Facebook raised about $16 billion, making it one of the largest U.S. IPOs ever. But it didn’t realize a first-day pop of 10 percent to 15 percent, a gain that is supposed to balance the risk for investors taking a flier on a new stock.