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Facebook shares reach new low; $50 billion in market value lost

By Jessica Guynn, Los Angeles Times –

SAN FRANCISCO — Facebook shares scraped a new low Tuesday.

The new drag on the already leaden stock: Analysts from two of Facebook’s largest underwriters on its botched initial public stock offering cut their price targets.

The Morgan Stanley and JPMorgan Chase analysts also reduced their revenue projections.

Shares closed down nearly 2 percent, or 33 cents, to $17.73 as some on Wall Street, floored that Facebook has shed $50 billion in market value in just three months, said they feared the company’s stock is nowhere near bottom.

Scott Devitt, an analyst with Morgan Stanley, Facebook’s lead underwriter, cut his price target on the Menlo Park, Calif., social networking giant for the next 12 months to $32 from $38. He also warned that shares could fall as low as $17.

Doug Anmuth, an analyst with JPMorgan Chase, cut his price target even more drastically, to $30 from $45.

Facebook’s stock was already under pressure, closing at an all-time low of $18.06 on Friday after two other analysts from underwriters cut their price targets.

But this was the cruelest cut. Until Tuesday, JPMorgan’s target for Facebook shares was Wall Street’s highest.

Still, Anmuth said he remains bullish on Facebook even as investors fret over slowing growth in Facebook’s advertising business, its anemic mobile strategy and unproven new advertising products, all of which could be a serious drag on the company’s revenue.

“We remain positive on Facebook as we expect advertising revenue to re-accelerate in the back half of 2012 and into 2013, even as users rapidly shift toward mobile,” Anmuth wrote in a research note.

Investors are waiting to hear what Facebook Chief Executive Mark Zuckerberg thinks of his company’s stock freefall. And they may get their chance: He has agreed to give an interview at TechCrunch Disrupt in San Francisco next Tuesday.

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