Facebook shares hit again as valuation doubts rise

The selloff in Facebook's shares deepened on Tuesday, as investors continued to question the stock's valuation after Reuters reported that underwriters cut their revenue forecasts for the company before the IPO.

Facebook's shares hit a low of USD 30.98 on Tuesday, 8.9% below Monday's close, a loss of 18% from their USD 38 IPO price.

At the low, the stock had lost 30% from an intraday high of USD 45 hit shortly after trading started on Friday. More than 28 million shares had traded in early action on Tuesday, making it one of the most actively traded in US markets.

Shares were recently at USD 31.75, down 6.7%  on the day.

Facebook's revenue growth has been slowing in recent quarters, raising flags among some who believe the company should show consistently strong revenue growth at this stage in its life.

The company surprised investors after disclosing, just days before the initial public offering, that its revenue may be hit by more users transitioning to mobile platforms, where advertising is less proven. That prompted the analyst at Morgan Stanley to surprisingly tell clients that he was cutting his revenue forecasts for the company.

The company's current price still implies very high annual growth rates. Thomson Reuters Starmine, meanwhile, using expected growth rates of about 10.8% over the next decade, values the shares at USD 9.59, or less than one-third of its current price.