Facebook Takes Another Hit: Users Spend Less Time on Site, Ads Don’t Lead to Sales

Follow The Daily Ticker on Facebook!

Facebook (FB) just can't catch a break.

The stock price hit a new low Monday, closing down 30 percent from its IPO price to $26.90 a share. This latest decline came after research firm Sanford & Bernstein slapped a $25 price tag on the stock and changed its rating to 'underperform' due in large part to decelerating growth in ad revenue.

Today a new Reuters/Ipsos poll supports Bernstein's case and highlights investor concern over Facebook's ability to increase ad sales, which is the company's main revenue source.

Four out of five users say they never buy products or services through ads on Facebook, according to a poll taken between May 1 and June 4. In additional, the poll found 34 percent of users are spending less time on the site versus six months ago.

On the brighter side, one in five users is buying goods and services from ads seen on the social media site and that 20 percent figure is a fairly large number when you consider Facebook has 900 million users worldwide. And 20 percent of users are spending more time on the site vs. six months ago.

In early trading, Facebook stock is up 1% to $27.12.

Much of the dissatisfaction with the stock, which had originally been heralded as the most exciting IPO since Google (GOOG), had to do with the company's botched initial public offering. The poor handling of the IPO has also tarnished Facebook's reputation with users. Forty-four percent of respondents say they now have a less favorable view of Facebook. (See: Facebook IPO Fiasco: How Small Investors Got Rolled Over)

In the accompany interview, The Daily Ticker's Aaron Task and Henry Blodget discuss all of the above, in addition to what has happened to a number of other social media stocks since Facebook's debuts. Zynga (ZNGA), Yelp (YELP) and Groupon (GRPN) are all trading considerably lower than their IPO price.

Groupon, in particular, made headlines Monday when its stock price fell below $9 a share, giving the company a market capitalization less than $6 billion, which was the price Google offered pay for the daily deal site in late 2010. Groupon went public at $20 a share.

Despite the falling stock prices in the social sector, Henry believes all the aforementioned are good companies, but were just valued way too high at the time of their IPOs.

Have you ever bought something via Facebook ad?

Advertisement