NEW YORK (Reuters) - Facebook Inc's 26 percent slide from its initial offering price may have investors who got in on the ground floor feeling resentful, but some fund managers are eager to see shares dip even further.
Technology glitches and a communications breakdown marred Facebook's $16 billion IPO on May 18, leading many observers to believe the initial stock was overvalued, contributing to its free-fall over the past two weeks.
Still, the company isn't value-free and at some price, shares represent an opportunity, portfolio managers say.
"There is no company in the Internet area that has gained such a huge market share in such a short period of time," said Mark Hawtin, portfolio manager of the $64 million GAM Star Technology Strategy, a portfolio for offshore investors launched in February 2011. "It's absolutely a value asset in the Internet world."
Hawtin believes $18 to $25 a share "would be a great entry point."
While many analysts are concerned about Facebook's ability to generate revenues from advertising, Hawtin believes the model for the social media website will eventually be fee-based, which could prove very profitable.
"I think they will be the launch page for people to get to the Internet," he said. Under a fee-based structure, vendors would pay Facebook for every user that goes to their site from Facebook.
For example, if Netflix Inc paid Facebook $10 for every person who came to their website, that could be $10 billion in revenue for Facebook, Hawtin said.
The fact that Facebook's stock did not go up right away and keep climbing in its debut may serve the company well in the long run, said Jerry Jordan, manager of the $67.2 million Jordan Opportunity Fund.
"If they were well-coached by their bankers, they may have been told to wait for three to four months after the IPO (to announce) any big projects," Jordan said. "You don't want to show your leverage before an IPO."
Jordan received a "tiny" allocation of Facebook stock pre-IPO and sold it the Monday after it started trading at a very small loss, he said. He may buy shares for the fund again if it hits $25 per share, he said.
Zack Shafran, manager of the $1.1 billion Ivy Science and Technology Fund is also unfazed by the concerns surrounding the stock's decline.
"A lot of the time there is a real disconnect between a company and a stock, and the Facebook IPO is a good example of that," Shafran said.
Shafran believes Facebook has a strong brand and organization, but is not convinced the company has shown evidence of a clear path to sustainable profitability.
Even so, Shafran said if the stock comes down enough, he would strongly consider buying it because of its products, management team and brand recognition. He did not have a specific stock price in mind.
Some fund managers say no price is low enough for them to be convinced to buy Facebook shares.
Dan Morris, portfolio manager of the $4.4 million Manor Growth Fund, is staying away from Facebook and other social media sites for the time being because they are overpriced.
"The valuations are not there," he said. He cites companies like Apple Inc and Google Inc -- both top holdings in his fund -- as having the strongest valuations in the technology sector.
Morris said it will probably be a couple of years before he knows if that's the right call.
"I don't want to be haughty," he said. "Sometimes you get it right, sometimes you don't."
On Friday, Facebook's stock fell 5.4 percent to $28.01. It's off more than 26 percent from its offering price of $38.
Reporting By Jessica Toonkel; editing by Jennifer Merritt and Jeffrey Benkoe