Brendan Mcdermid / Reuters

Commuters pass by the Nasdaq Marketsite in New York.

Shares of Facebook continued to slide Tuesday, even as the broader market managed a modest gain, as fallout from the company's IPO last week continued.

The social network’s share price was lately down 3 percent, adding to a decline of 11 percent seen in Monday's session. Facebook is now down 27 percent from Friday's intra-day high of $45 a share. (Track Facebook's stock price here.)

Facebook's market debut on Friday was beset by problems, so much so that Nasdaq said on Monday it was changing its IPO procedures. That may comfort companies considering a listing, but it does little for Facebook, whose lead underwriter Morgan Stanley had to step in and defend the $38 offering price on the open market. 

Facebook, its investment bankers and the Nasdaq market have come under fire for not making sure one of the most anticipated market offerings in recent memory happened smoothly.

When a stock falls below its offer price so soon after an IPO it is considered a disappointment for the company, particularly when the IPO is the most heavily traded ever and concerns such a high profile company.

A number of reasons for the stock decline have been offered by observers. Some pointed to underwriters offering too many shares, while others blamed an overly strong IPO price and worries about slowing revenue growth at the social network.

Also, Reuters reports that Facebook’s lead underwriters -- Morgan Stanley, JPMorgan and Goldman Sachs -- cut their revenue forecasts for the company in the run-up to the company’s $16 billion IPO.

Related: Blame game begins after Facebook debacle

The broader market was edging higher Tuesday amid news that Japan's sovereign rating was cut by Fitch as a political stalemate dimmed chances the country could curb its snowballing debt.

Fitch lowered Japan's long-term foreign currency rating to A plus from AA. It cut the local currency rating to A plus from AA minus. Both were cut with a negative outlook.

The United States and Japan are leading a fragile economic recovery among developed countries that could be blown off course if the euro zone fails to contain the damage from its problem debtor states, the OECD said on Tuesday.

Nasdaq OMX faces short-term costs from its botched handling of Facebook shares on their first day of trading on Friday, but longer-term repercussions could be more expensive as it struggles to restore its image.

Initially, the exchange said it planned to set aside $13 million to resolve bad trades; even if all of that was used, the cost would be minimal compared with the $387 million in net income it reported last year.

China will fast track approvals for infrastructure investment to combat a slowdown in the economy, a state-backed newspaper reported on Tuesday, underlining a call by Premier Wen Jiabao for policies to maintain growth.

Stocks rose more than 1 percent on Monday, with the S&P 500 snapping a six-day losing streak, as equities rebounded from their biggest weekly drop in almost six months.

Reuters contributed to this report.

Richard Drew / AP

A television reporter stands inside the Nasdaq MarketSite in New York as Facebook's shares fall.

The stock market rallied Monday, but Facebook’s shares sank in the first day of trading without the full support of the company's underwriters.

Facebook's market debut on Friday was beset by problems, so much so that Nasdaq said on Monday it was changing its IPO procedures. That may comfort companies considering a listing but does little for Facebook, whose lead underwriter Morgan Stanley had to step in and defend the $38 offering price on the open market.

Without that same level of defense, its shares fell 11 percent Monday from Friday's intra-day high of $45 a share, closing just below $34. (Track Facebook's stock price here.)

"At the moment it's not living up to the hype," Frank Lesh, a futures analyst and broker at FuturePath Trading LLC in Chicago said, adding that some people may have decided to hang back and buy the stock on the declines.

"Look at the valuation on it. It might have said 'buy' to a few people, but boy it was awfully rich," he said.

The losses wiped some $19 billion off of the company's market capitalization -- not far from what Chief Executive Mark Zuckerberg was worth personally when the stock debuted.

Related: After Facebook IPO debacle, finger-pointing begins

Volume was again massive, with more than 96 million shares trading hands in the morning session alone, making it by far the most active stock on the U.S. market. Nearly 581 million shares were traded on Friday.

"One of the things that we are seeing in Facebook is a lot of emotional trading, in that over the weekend much of the media coverage was negative, and that could be weighing on investors' decisions to get out of the stock," said JJ Kinahan, TD Ameritrade's chief derivatives strategist.

The drop was so steep that circuit breakers kicked in a few minutes after the open to restrict short sales in the stock, according to a notice from Nasdaq.

Shares in other one-time Internet darlings fell in lockstep with Facebook on Monday, with Yelp, LinkedIn and Zynga all lower.

As Facebook fell, there was a long list of questions -- ranging from whether the underwriters priced the shares too high to how well prepared the Nasdaq was to handle the biggest Internet IPO ever -- and few immediate answers.

"It was just a poorly done deal and it just so happens to be the biggest deal ever for Nasdaq and they pooched it, that's the bottom line here," said Joe Saluzzi, co-manager of trading at Themis Trading in Chatham, New Jersey.

The broader market fared better. The Dow Jones industrial average close the day up 135 points.

Nasdaq said Monday morning the changes it was making would prevent a repeat of what happened Friday, when glitches prevented some traders from knowing for hours whether their trades had been completed.

Related: Trading expert on Facebook IPO debacle

The exchange also said it would implement procedures to accommodate orders that were not properly executed last week, which could ultimately lead to compensation for some investors.

"It doesn't instill confidence for clients. Talk about trying to convince them it isn't a casino," one Midwestern financial adviser told Reuters on Monday.

Separately, a source said Morgan Stanley's brokerage arm still had a "large number" of share orders from Friday that were not confirmed, which it was working to resolve.

A Facebook spokeswoman declined to comment on the share price issue.

But analysts said that after the initial frenzy, investors were quickly becoming cautious about the stock.

"Investors are increasingly aware of the risk embedded in the stock price. There are real concerns about growth and advertisers' frequent lack of certainty how best to use Facebook, along with rising costs and ongoing acquisition risk," said Brian Wieser at Pivotal Research Group, who has a $30 target on the stock.

"At $38, the stock is priced for perfection in a manner that implied that risks were negligible."

In earnings news, Lowe's Cos Inc, the world's second-largest home improvement chain, cut its fiscal-year earnings outlook and said demand slowed toward the end of the traditionally strong first quarter.

Yahoo shares rose after news that Chinese Internet entrepreneur Jack Ma is buying back up to half of a 40 percent stake in his Alibaba Group from Yahoo for $7.1 billion in a deal that moves the Chinese e-commerce leader closer to a public listing.

Reuters contributed to this report.

Brendan Mcdermid / Reuters

Monitors show the value of Facebook's stock Monday morning in New York.

Facebook stock's slide continued Monday, leaving some investors wondering about the outlook for the newly public social network.

Facebook's stock tumbled below its $38 IPO price on its second day of trading. By Monday afternoon the company’s share price was down 10 percent from Friday’s closing price of $38.23. (You can track the performance of Facebook’s stock price here.)

When a stock falls below its offer price so soon after an IPO it is considered a disappointment for the company, particularly when the IPO is the most heavily traded ever and concerns such a high profile company.

A number of reasons for the stock decline were offered by observers. Some pointed to underwriters offering too many shares, while others blamed an overly strong IPO price and worries about slowing revenue growth at the social network.

Investors and technology industry watchers are closely tracking the Menlo Park, Calif.-based company's shares. Facebook's initial public offering was one of the most anticipated ever and now serves as a bellwether for other social media companies.

“There must have been some sober second thoughts about this,” said Brian Wieser, an analyst at Pivotal Research Group who was first to come out with a “sell” rating on Facebook's stock on Friday.

Daniel Ernst, principal at Hudson Square Research, said he still thinks Facebook is “a fantastic company.”

“Fifty-three percent operating margins, 901 million users around the world. … They can provide detailed targeting to advertisers,” he told CNBC. He noted that many investors want to own Facebook’s stock, but for some the stock’s multiple -- a method for valuing companies and their stocks -- is too high.

“I really think we are in inning one of Facebook growth,” he said. “I really think Facebook has something; for me, it’s just a question of price.”

Related: Facebook drops below $38 IPO price

Facebook’s market debut Friday suffered some hiccups.

Initial trading on the Nasdaq was delayed for half an hour due to issues with some orders. The stock closed Friday just a few cents above where it priced Thursday night. Although many investors had hoped for a big first-day pop, Facebook's stock opened Friday at $42.05 and fluctuated between $45 and $38 throughout the day before closing at $38.23.

Underwriting banks reportedly had to step in and buy shares to avoid the embarrassment of seeing the stock close below its IPO price on the first day of trading.

Bob Greifeld, chief executive of the Nasdaq stock market, admitted Sunday that technical issues had tarnished Facebook’s debut as a public company but argued that the technical glitches had not had an impact on the performance of the shares.

Thomas M. Joyce, chairman and chief executive officer of trading firm Knight Capital Group, appeared on CNBC Monday to dissect Facebook’s first-day IPO flop Friday, and he laid the blame at Nasdaq’s door.

“This is arguably the worst performance by an exchange on an IPO -- ever,” said Thomas M. Joyce, chairman and chief executive officer of trading firm Knight Capital Group. "The failure was Nasdaq’s.”

Joyce argued that the Nasdaq snafu hurt the stock price.

“This was simply a technology problem,” Joyce told CNBC. “This was like your server going down, except on a massive scale. And instead of stepping back and rebooting, they kept plowing ahead.”

Wedbush analyst Michael Pachter, who came out with an "Outperform" rating on Facebook before its IPO, said investment banks that arranged the offering overestimated the demand.

Last week the bankers, led by Morgan Stanley, increased the offering price range. On Wednesday, the size of the offering was increased. Both moves appeared to signal strong demand for the shares.

Related: Nasdaq ‘embarrassed’ about Facebook delay

“The late addition of 84 million shares to the offering overwhelmed demand, limiting the first day price,” Pachter said in a note to investors.

Deutsche Bank’s Brad Miller, an expert on pricing IPOs, said the trading glitch was due in part to the fact that it was difficult to find a comparable company, or a competitor, to use when valuing the company.

Most IPOs value companies at well below $25 billion, compared with more than $100 billion for facebook when it went public.

“It does create a bit of an issue,” he said on CNBC.

Miller said Facebook’s lackluster performance might make investors wary of investing in future IPOs.

“Investors may take a pause after how the Facebook transaction has traded,” he said, adding that market volatility is also an issue.

“April was the worst month in terms of money flows since 1984, and May is trending in that direction, so we need a turnaround in volatility,” he said. “I think we are going to take a pause here in the new issue market (until we see the) macro issues subside.”

The Associated Press contributed to this report.

The CEO of the Nasdaq stock exchange says it is "humbly embarrassed" by its bungling of Facebook's hugely anticipated debut as a public company on Friday.

Robert Greifeld told news media there's no indication the delay contributed to the underwhelming performance of Facebook's stock, which ended at $38.23 — 23 cents above where it began.

Facebook's stock was expected to start trading at 11 a.m. but didn't open until 11:32 a.m., and some investors didn't learn for hours whether their orders went through.

Greifeld called the company's first day of trading "successful." He said late order cancellations caused a glitch, according to reports published Sunday. He said Nasdaq's board met Saturday and plans to change its IPO auction process.

The Securities and Exchange Commission has said it is investigating.

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Shares in social media company Facebook Inc could fall below the initial public offering price of $38, Barron's wrote in its May 21 edition.

Facebook saw its shares rise a scant 0.6 percent to $38.23 on Friday in the first day of trading.

The stock stayed above the $38 IPO price, supported in the market by the deal's underwriters. But Barron's said the "big question" this week will be whether they continue to do so.

Its shares still look overpriced compared with rivals such as Google Inc , and all the more so given Facebook's challenges in drawing revenue from mobile device users, the financial weekly wrote.

Facebook's shares also face the prospect of pressure from heavy sales of stock between now and the end of 2012 if early and inside investors get rid of shares ahead of a potential rise in capital gains taxes, according to Barron's. 

Below, Andrew Rachleff, Wealthfront president & CEO, and David Callahan of Demos, discuss Facebook's effect on the economy on CNBC.

Valentin Flauraud / Reuters

Mobile could figure prominently in Facebook's plans for the billions it is reaping from its IPO

Last month, Mark Zuckerberg unilaterally decided to shell out $1 billion for Instagram, a social network based on mobile photos. As of Friday, Facebook's CEO Mark Zuckerberg now has even more money to throw around.

According to Facebook's filings with the Securities and Exchange Commission, the company expects to have about $10.3 billion in cash after it sells stock to the public, along with a valuation that could top $100 billion.

So what is Facebook going to do with all that cash?

In its official filings, Facebook says there are no specific plans for the money; it will be used for working capital, general corporate purposes, and mundane uses like paying tax on employee stock grants. But let's face it: $10 billion is a lot more than Facebook needs to pay the electric bill and make good with Uncle Sam.

With that kind of money (and some stock), Zuckerberg could eventually make a run at that other social network, Twitter. He could buy enough patent protection that tech companies like Yahoo would be more careful about making legal attacks. And he could buy lots of startups; former Facebookers Dustin Moskovitz at Asana and Dave Morin at Path are just a couple of examples of the innovative entrepreneurs who are taking social technology to new places.

"Facebook's got essentially the "Brewster's Millions" problem. They've got so much money already, with just the cash that they're throwing off from operations, that they don't actually need the money that they're going to raise in this IPO," says Rocky Agrawal, an independent analyst. That said, if Zuckerberg does decide to get bold, "I would love to see Facebook get into TV, I would love to see Facebook get into the payments space."

There are downsides to moves like that, of course. Like focus. John Malloy, a venture capitalist at BlueRun Ventures, says especially with a sudden windfall, Facebook must be careful to be choosy about where it invests.

"The most important thing is they should figure out what are the areas that are core," he says. "The areas that are core, they have to make acquisitions. They would want to own those."

Mobile is a prime example — which explains that Instagram buy.

Of course, Zuckerberg has all but ruled out making billion-dollar moves like that anytime soon. "We don't plan on doing many more of these" huge acquisitions, Zuckerberg said in a blog post, "if any at all."

Of course, a few months ago, Zuckerberg probably didn't plan on shelling out a billion for a mobile app, either. So things can change.

More from CNBC.com:

Why Facebook is Celebrating Its IPO With a Hackathon

As Facebook Deal Grows, So Does Cash-Out Opportunity

What's Your IPO IQ?

Full Facebook IPO Coverage from CNBC

Below, CNBC's Bertha Coombs reports on how Facebook is trading since its IPO and its impact on Zynga, Apple and the Nasdaq Index. CNBC's Brian Shactman also offers insight into the "diaries" of other big tech IPOs and their growth over the years. 

Facebook is not the only place GM is unfriending.

In the latest in a series of surprise moves, General Motors has decided to boycott next January’s Super Bowl advertising extravaganza in protest over a huge increase in advertiser rates.

The decision follows word that the maker will also pull its ads off Facebook, the social media site that is today on its way to what could be the largest IPO in U.S. history. But insiders say GM is weighing more heavily than ever the perceived payoff for its estimated $4.5 billion ad budget, backing out of purchases that might deliver a halo but relatively little in terms of actual results.

“We continue to understand the value the Super Bowl provides,” said GM marketing spokesman Pat Morrissey, “but with the continued increase in price we just can’t justify it,” he said confirming a report in the Wall Street Journal itself attributed to the maker’s marketing czar Joel Ewanick.

The Super Bowl is considered not only the championship game for American football but the ultimate venue for advertisers – at least when it comes to “counting eyeballs,” in advertising parlance.  The Nielsen Co. reported 111.3 million Americans watched the game in February of this year, making it the third consecutive year it set a record as the most-watched TV program in U.S. history.  It was one of only four broadcasts to top 100 million viewers, a rarified list including the previous two championship games and the 1983 finale of TV series M*A*S*H.

Shake-Up at GM As Maker Prepares for Critical New Product Launches

But advertising rates have been rising faster than the actual viewership of the game, according to industry experts, reportedly reaching between $3.0 million to $3.2 million in February 2012. Sources told TheDetroitBureau.com that the figure is approaching $4 million for the game airing on CBS in 2013.

GM spokesman Morrissey would only say that the maker balked at what he described as a “pretty significant” increase for the planned broadcast of Super Bowl XLVII.

The maker’s boycott comes with a big asterisk, however.  GM is only dropping out of “national advertising specific to the in-game” broadcast.  In February of this year that included three 30-second spots and a longer, 1-minute commercial for the Chevrolet Silverado that was itself quite controversial.

(It aimed to suggest that after the apocalypse purportedly predicted in the Mayan calendar for late 2012 only the Chevy pickup will still be running.  Ford Motor Co. threatened to sue to prevent the commercial’s airing, claiming industry data showed that maker’s F-Series model was more likely to survive the end of life, the universe and everything.)

Martin Scorcese Working up Rolls-Royce Biopic

But it appears GM might not be totally absent from the football festivities.  It also ran several ads during the Super Bowl pre- and post-game TV coverage.  And Morrissey acknowledged that it has not yet been decided whether to continue or drop those programs, as well.

GM previously pulled out of the 2009 Super Bowl due to the financial crisis that led to it filing for Chapter 11 bankruptcy protection that year.

The maker confirmed, earlier this week, that it will be ending its ad relationship with Facebook over the summer, Chevrolet marketing chief Chris Perry arguing the ads generated “insufficient” results.  But GM has also said it will maintain an unpaid presence on the 900-million-member social media site.

Ford and GM Battle it Out in Twitter Flame War

The decisions to drop Facebook and now walk away from the Super Bowl aren’t coming as a huge surprise to Detroit-watchers who have seen big changes in the way the domestic makers have been operating over the last several years.  Each of the Big Three has been looking for ways to break out as they struggle to reach potential buyers – especially those who have long ignored domestic products.

GM’s Ewanick has been especially aggressive, building a reputation as a game-changer since his arrival at the maker’s riverfront Detroit headquarters in May 2010.  He has fired long-standing agencies, such as Chevy’s nearly eight-decade partner Campbell-Ewald, and more recently approved plans to consolidate a group of agencies to serve the brand on a global scale.

The former head of Hyundai marketing, Ewanick has promised to re-evaluate every aspect of the massive GM ad budget.

Among other things, it has long been a matter of debate just how well sports advertising pays off, but a well-placed media executive at one of Detroit’s largest ad agencies said that the regular run-up in pricing for the Super Bowl spots is simply “all about supply and demand.”  Asking not to be identified by name because they didn’t have permission to talk to the media, the executive said, “The rates won’t come down as long as there’s someone who wants it.”

So, might GM’s decision to back out put downward pressure on CBS deal-makers? Not likely, said the advertising executive.  “Somebody else will want (the ad slots).”

If you just bought shares in Facebook or are considering doing so, you probably want to know what the company is doing to keep its employees happy.

At its new headquarters in Silicon Valley, CNBC reports that the social media giant goes beyond just free food and on-site drycleaning (that's so Google).

Facebook employees also can use a treadmill while taking conference calls, walk or bike the faux streets of the complex, get a beer on tap and write something on a literal Facebook wall.

Employees also apparently named the conference rooms, which gives you an insight into the geekdom at work here. Got a meeting? Put on your hoodie and head down to Jar Jar Drinks or Mai Tai Fighter.

Do the employee perks at your office compare to the ones at Facebook HQ? Tell us in the comments section below. 

Facebook via EPA

Facebook CEO Mark Zuckerberg rings the Nasdaq's opening bell from Menlo Park, Calif.

Updated at 4:00 p.m. ET: After jumping more than 10 percent at the start of trading, shares of Facebook pulled back in their market debut Friday, suggesting a cooler-than-expected reception for one of the most watched initial public offerings of stock of recent years.

Facebook’s stock jumped to $43 in initial trading, up about 13 percent from an IPO price of $38. But the stock quickly gave back some of its initial jump and fell as low as $38 in their first half hour of trading, at which point IPO underwriters stepped in to support its price, according to reports. Facebook’s share price eventually closed at just above $38.

The broader stock market was lower Friday, with social media stocks among the day’s biggest losers. Shares of LinkedIn, Pandora and Groupon were all lower.

Facebook’s opening trade was delayed. Its stock was originally due to begin trading on the Nasdaq stock market at 11 a.m. ET, but was delayed by about 30 minutes as traders experienced problems with changing and canceling orders they had submitted to the Nasdaq, The Wall Street Journal reported.

Despite the technical difficulties, retail demand for the Facebook offering was very strong, traders told CNBC, with an expected retail component of 15 percent to 25 percent. Trading volume in Facebook exceeded 100 million shares in the first three minutes of the stock’s trading, the Journal said.

Facebook’s market reception was unusual. Other recent big Internet IPOs have seen strong starts, including LinkedIn, which went public almost exactly a year ago at $45 a share and closed at $94 on a volatile first day of trading that saw its shares top $122 at one point.

Related: Want a piece of Facebook? Here's what you need to know

That means investors lucky enough to get in at the offering price were able to book an immediate paper profit of more than 100 percent or "flip" shares and cash in. Other investors paid as much as $122 a share for LinkedIn that day and were left with paper losses. (LinkedIn shares currently trade for about $100.) 

Groupon, another recent Internet IPO, leaped 27 percent on its opening day.

Earlier Friday, Facebook founder and CEO Mark Zuckerberg rang the opening bell for the Nasdaq stock market from Facebook’s headquarters in Menlo Park, Calif. Shares of Facebook are now trading on the Nasdaq under the symbol “FB.” (You can track the performance of Facebook’s stock price here).

Facebook went public after the close of trading Thursday at $38 a share, raising $16 billion in a landmark initial public offering that values the company at more than $100 billion.

Investment banks organizing the stock offering set the price at the top end of the range of $34 to $38 per share estimated by Facebook in a regulatory filing earlier this week.

At $38 a share, the offering values the eight-year-old company at $104 billion, making its IPO the largest-ever stock market debut for an Internet company. It will raise more than $16 billion for Facebook and selling shareholders, including Zuckerberg, and ultimately could raise up to $18.4 billion, assuming underwriters exercise their option for “overallotments” to meet strong demand.

Related: Facebook founder Zuckerberg opens trading at Nasdaq

Zuckerberg updated his profile on Facebook Friday morning, listing his company on the Nasdaq market.

Facebook has enjoyed remarkably swift growth. In just eight years the company has gone from a college service founded in a Harvard dorm to the third-largest public offering of stock in U.S. history, after stock offerings from General Motors and Visa.

The sky-high valuation of Facebook puts it a bit ahead of Web veteran Amazon.com, which has more than 10 times Facebook's $3.7 billion in revenue. But Facebook is growing quickly and posted $1 billion in profits last year, more than Amazon's $631 million.

The Associated Press contributed to this report.

Justin Sullivan / Getty Images file

Facebook CEO Mark Zuckerberg is selling about $1 billion worth of shares and will be left with a stake valued at $19 billion.

Updated at 4:30 p.m. ET: Facebook went public Thursday at $38 a share, raising $16 billion in a landmark initial public offering that values the company at more than $100 billion.

Investment banks organizing the stock offering set the price at the top end of the range of $34 to $38 per share estimated by Facebook in a regulatory filing earlier this week. Shares of Facebook are expected to begin trading publicly on the Nasdaq stock market Friday at 11 a.m. ET under the symbol "FB."

At $38 a share, the offering values the eight-year-old company at $104 billion, making its IPO the largest-ever stock market debut for an Internet company. It will raise more than $16 billion for Facebook and selling shareholders, including CEO Mark Zuckerberg, and ultimately could raise up to $18.4 billion, assuming underwriters exercise their option for "overallotments" to meet strong demand.

The IPO will leave Zuckerberg in control of the company, with more than 50 percent of the voting shares, and make him fabulously wealthy in the process, with a stake valued at some $19 billion.

Other early investors in Facebook also will make a killing.

For example, Peter Thiel, the venture capitalist who sits on Facebook’s board of directors, invested $500,000 in the company back in 2004. He’s selling nearly 17 million of his shares in the IPO, which means he'll get some $640 million.

Related: Who’s gonna get rich on the Facebook IPO?

The sky-high valuation of Facebook puts it a bit ahead of Web veteran Amazon.com, which has more than 10 times Facebook's $3.7 billion in revenue. But Facebook is growing quickly and posted $1 billion in profits last year, more than Amazon's $631 million.

For individual investors, who will get their chance when Facebook begins trading Friday, investing in the company could be a risky bet, said Jay Ritter, an IPO expert and Cordell Professor of Finance at the University of Florida.

“My concern with Facebook is that at the valuation that public market investors are going to be buying in at there’s very little upside potential left,” he told CNBC.

But, he added, it doesn’t necessarily follow that Facebook is overvalued.

“The bullish case for Facebook is, as Google has demonstrated, targeted search can be an extremely profitable business, and Facebook has that franchise with social networks and it’s a very defensible business model,” Ritter said.

Related: Want a piece of Facebook? Here's what you need to know

In a regulatory filing issued Wednesday, Facebook said it expects to sell as many as 421.2 million shares, up from a previous maximum of 337.4 million. The company is selling 180 million shares, raising an estimated $6.8 billion for general business use. The rest of the shares are being sold by early investors and company insiders who are cashing out.

An additional 63.2 million shares could be sold to cover the overallotments. 

The Associated Press contributed to this report.

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Facebook's marketing payoff: Reality or fantasy?

Is Facebook worth the price? Analysts split

A non-investors guide to Facebook's IPO

In this 2004 interview with Becky Quick, Mark Zuckerberg's talks about his new social media site -- a plucky startup called Facebook.

When a world-renowned expert on initial public offerings has reservations about the upcoming Facebook IPO, it’s worth sitting up and taking notice.

Jay Ritter, Cordell Professor of Finance at the College of Business Administration at the University of Florida, appeared on CNBC Thursday morning to discuss his views on Friday’s much-anticipated stock offering from the social network.

“My concern with Facebook is that at the valuation that public market investors are going to be buying in at there’s very little upside potential left,” he told CNBC.

But, he added, it doesn’t necessarily follow that Facebook is overvalued.

“The bullish case for Facebook is, as Google has demonstrated, targeted search can be an extremely profitable business, and Facebook has that franchise with social networks and it’s a very defensible business model,” Ritter said.