(By Fred Dunsel) Facebook Inc. (NASDAQ:FB) finally had a brief respite from sliding stock prices when it delivered a 10.7% weekly gain, primarily brought about by a 6.1% single-day gain on Friday. Closing at $30, the stock is 21% down from its IPO price, although it also represents a 17.6% gain from its all-time low of $25.52 in early June.
The social network, currently valued at $64.2 billion, still faces an onslaught of lawsuits, though it has since taken the offensive by filing a motion with New York City's federal court for the consolidation of the numerous investor lawsuits into one case It also filed a court brief alleging that NASDAQ's trading system glitch during the May IPO, together with other actions by the stock exchange, contributed to the drastic fall in share price.
In recent weeks, the company continues to face a spate of bad publicity. On another legal front, Facebook agreed to pay $10 million to charity to settle a lawsuit that alleged that the social network violated users' rights to control the use of their own names and photographs. The lawsuit, brought about by five Facebook members, accused Facebook of violating California law by publicizing users' "likes" of certain advertisers on its "Sponsored Stories" features without allowing the latter a way to opt out. According to previous court documents, the proposed class-action lawsuit could potentially end up with billions of dollars in damages, which was probably why the company chose to settle quickly.
Last week also saw the departure of Bret Taylor, Facebook's Chief Technology Officer to pursue a future start-up. Given that such information would not be well-received by investors particularly so soon after the IPO debacle, it was notable that it was only made public after the market close on Friday.
Until Facebook sorts out its current woes as well as show greater credence to its existing business model, many investors are likely to stay away for the time being. While the social network's enormous user base and advertising potential is undeniable, whether it really justifies the current valuation remains to be seen.