Facebook (FB) Stock Down Amid IRS Investigation
NEW YORK (TheStreet) -- Shares of Facebook (FB) - Get Report are sliding 0.70% to $115.88 in mid-afternoon trading on Thursday as the IRS investigates the transfer of certain rights associated with its global business to an Irish holding company, Reuters reports.
The Justice Department filed a lawsuit earlier today with the intention of enforcing IRS summonses served to the social network and to pressure Facebook to produce documents as part of the agency's probe.
The agency hopes to obtain documents tied to an IRS investigation of Facebook's 2010 tax liability, Reuters adds. At the time, Facebook's tax return disclosed royalty income from transfers of rights associated with its worldwide business to Facebook Ireland Holdings Unlimited.
Information obtained by the IRS so far suggests that accounting firm Ernst & Young, which was employed by Facebook, took a a "problematic" approach to valuing the transfers for tax purposes.
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Separately, TheStreet Ratings team rates the stock as a "buy" with a ratings score of B+.
Facebook's strengths such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, impressive record of earnings per share growth, compelling growth in net income and expanding profit margins outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value.
You can view the full analysis from the report here: FB
TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this article's author.