Facebook Shares slide below $29 on Tuesday and other news stories investors should know about today.
FACEBOOK SHARES SLIDE PRECIPITOUSLY
Facebook shares slid below $29 on Tuesday, down 9.6 percent, closing at $28.65. Since its debut on May 18 the company has lost $25 billion in value, roughly equivalent to the value of Morgan Stanley, according to Reuters. Wall Street is concerned whether Facebook will be able to benefit from advertising on mobile technology. Additionally, Facebook is rumored to be dabbling with the acquisition of a smartphone provider causing concern that it is moving away from its area of expertise.
HOME PRICES SURGE BUT CONFIDENCE FALLS
The S&P/Case Shiller composite home price index of 20 metropolitan areas gained 0.1 percent but fell short of economists’ expectations, according to Reuters. Prices fell 2.6 percent from a year ago, an improvement from the 3.5 percent yearly decline seen last month. Seven of the twenty cities, including Detroit and Phoenix, saw increases in prices compared to a year ago. Consumer confidence, however, fell to its lowest level this year, according to the Conference Board.
DISNEY INVESTMENTS BEGIN TO PAY OFF
For those who thought that Disney was crazy reinvesting billions of dollars into its business during a recession, it may be time to change their opinions. The Wall Street Journal reports that Disney has entered the final stage of a heavy capital investment in intellectual property, new cruise ships and upgrades to its theme parks and will soon be experiencing a cash explosion. This will drive dividend increases and share buybacks. Revenue for its theme parks is up 10 percent in the first quarter compared to a year ago and operating income rose 53 percent. Disney shares reached an all time high of $45.80 on May 15 after strong earnings and the blockbuster debut of “The Avengers”. The stock is trading at 13.6 times forward earnings well below its historic 15 times earnings. Earnings are expected to grow at 18 percent in 2012. The Disney Magic hasn’t stopped.
MARKETS UP ON TUESDAY DUE TO EU OPTIMISM
On Tuesday the Dow rose 125 points to close at 12,580, according to the Wall Street Journal. Markets were up due to optimism about Greece’s prospects to remain in the euro. CNBC is reporting that the European Union has said that the Euro Zone should move toward a Banking Union. This has caused the euro to jump after sagging recently against the dollar. Both Asian and European markets are still negative primarily due to fears over Spanish banking problems and low action yields on Italian bonds today.