Facebook shares reached a record low for the third consecutive trading session Monday, falling lower than half the price commanded in the company's record-breaking initial public offering before rallying to higher than $20.

The world's most popular social network began its most recent descent Thursday, when millions of shares belonging to early investors and insiders became available for trades as the first post-IPO lockup expired. Shares continued to slide Friday, briefly hitting $19 in intraday trading, half the $38 IPO price just three months after the company's public debut.

Monday morning, shares dipped lower than $19 for the first time, touching as low as $18.75; the stock rebounded, however, closing at $20.01, a 5 percent daily increase.

Facebook went public after a highly anticipated IPO on May 18, selling shares at $38 apiece and establishing a record for valuation at IPO time of $104 billion. Problems started immediately, however, as the first day of trading was bungled by Nasdaq, confusing investors who did not know if requested trades had been processed.

The stock closed barely higher than the IPO price on the first day of trading, with reports that Facebook's underwriting banks, led by Morgan Stanley, had bought shares in bulk to maintain that price.


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Shares fell lower than the IPO price on the second day of trading and have never returned, as reports appeared showing that pre-IPO revenue projections had been downgraded, a fact that was shared with large institutional investors but not the public at large.

Since the IPO, investors have been shaken by reports of Facebook's slowing growth rate and by uncertainty over whether major advertisers are willing to commit their budgets to a still-evolving ad platform.

Last week's expired lockup added 271.1 million shares to the initial offering of 421 million shares, increasing Facebook's "float" by more than 64 percent.

Certain early investors and executives were handed control of their shares to trade, including famed investor Peter Thiel, Goldman Sachs, Chief Operating Officer Sheryl Sandberg and Chief Financial Officer David Ebersman.

However, few were expected to sell shares with the price so low; Microsoft, an early Facebook partner that owns more than 26 millions shares of stock, said last week it would probably not divest any stock, for instance.

The stock could face more pressure in the months to come. Facebook is expected to report earnings for the current quarter in October, just weeks before the biggest batch of insider shares become eligible for sale. A large group of mostly Facebook employees will be free to sell 1.2 billion shares as of Nov. 14.

Analysts seemingly still believe in the stock: Of 38 experts tracked by MarketWatch, only two believe investors should sell their shares, with 15 rating the stock a "Hold" and 18 rating it a "Buy." The average price target -- the price at which an analyst believes an investor should sell shares for the greatest return -- is $35.30.

Contact Jeremy C. Owens at 408-920-5876; follow him at Twitter.com/mercbizbreak.