Facebook shares plunged nearly 11 per cent overnight during the stock's first full day of trade as the enthusiasm from a massive public offering for the social network giant turned to scepticism.
The stock closed at $US34.03 ($A34.71), down 10.99 per cent for the day and well below the $US38 initial public offering price, which made Facebook the second largest US IPO of all time.
The tumble followed a turbulent opening trading session on Friday, which saw an early surge in Facebook shares, then a fall back to the offering price of $US38. With help from underwriters, the stock ended up slightly.
"Retail investors are scared. Most people thought this was a hot deal, and now that it's not, no one knows where the bottom is," said Lou Kerner of the Social Internet Fund.
"Underwriters generally support the stock at the offering price, and that support now appears to be exhausted."
Kerner said the action was "reminiscent of the Google IPO, which struggled out of the gate. But when Facebook reports second quarter numbers, likely sometime in early-to-mid July, the shares will increasingly trade on the fundamentals, not on fear."
Douglas McIntyre at 24/7 Wall Street said he sees the shares tumbling as far as $US28 -- the low end of the original price range before it was boosted.
"Facebook's management may have insisted that a $US38 valuation was important because they wanted to raise as much money as possible, even if that risked only a small increase in its shares," McIntyre said.
"Nothing in Facebook's financial fundamentals changed in the past two weeks. If anything, its valuation should have been undermined some by news that General Motors dropped its advertising from the social network because it was ineffective."
Other analysts said the market was unable to digest the massive amount of shares being offered, particularly with investor sentiment cautious over economic conditions and a tense situation over the eurozone and Greece.
The IPO generated much hype as investors seemed hungry to get in on the social network with 900 million members, but some questioned whether it can continue to grow and earn more profits.
Trip Chowdhry at Global Equities Research said Facebook has failed to convince the market it can boost revenues with users moving to mobile internet.
"We think Facebook is a good company but not at these valuations," he said.
Underwriters had expanded the Facebook offer to 421 million shares and raised the price just days before the IPO.
Listings are usually preceded by an elabourate dance, as underwriters and firms try to manage expectations.
Nevertheless the IPO raised $US16 billion in an issue which ultimately valued it at $US104 billion. But with the stock plunge, the value slid to around $US93 billion.
Some analysts contended that the cool response to what was billed as the hottest public stock offering in years showed that investors have learned from the folly of dot-com boom days and are gauging the social network's potential to turn its popularity into profit.
Market trackers have reported that people are much more likely to click on ads at Google than at Facebook.
"The marketing community is increasingly recognising that Facebook is of very limited value as a marketing tactic," said Pace University business school professor Larry Chiagouris.
"The best advice to investors is to pass on this one," he said.
"The best advice to marketers is to limit spending on Facebook until it can prove it returns meaningful results."