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Facebook shares sag as investors, analysts question future

The company's share price is down 3.5 percent in early trading following yesterday's earnings report. One analyst wonders: where are the near-term catalysts?


Facebook shares are down today, spelling some possible erosion in the stock price heading into the rest of the week of trading.

Shares in the big social network are down 3.5 percent today to $30.13 in early trading. The company's stock ended the day yesterday at $31.24, up significantly from the company's 52-week low of $17.55. That rally has been due to Facebook's ability to gain traction in mobile and reassure investors that it could continue to grow.

The company went a long way in making its case yesterday, reporting better-than-expected fourth-quarter earnings. During the period, the company's revenue grew 40 percent year over year to $1.59 billion. Facebook was also able to post an adjusted earnings per share of 17 cents, beating Wall Street's estimates.

So then, why are Facebook shares down? It might have less to do with past performance and more to do with the ability for Facebook shares to actually grow.

Here's what Citi analyst Neil Doshi had to say:

We view FB as a core long-term 'Net stock. But with plans to invest heavily in the biz in 2013, and little expected contribution from new initiatives like Gifts or Graph Search, we don't see any near-term catalysts for the stock. And Mobile Ads appear to be cannibalizing Desktop, which further concerns us.

Doshi downgraded Facebook's shares to neutral and put its price target at $30.

But not every analyst agrees with Citi. Wedbush analyst Michael Pachter said in a research note today that there's good reason to be bullish on the company's shares and he has placed Facebook's price target over the next 12 months at $35:

Our price target reflects Facebook's strong monetization potential from increased mobile penetration and a series of initiatives as well as future success from new products like Graph Search and targeted ads.

We will continue to update this story as Facebook shares continue trading.

Update 7:45 a.m. PT to include Facebook's latest share price.