Facebook's shares sank an additional 8.9 percent Tuesday as questions mounted over the company's long-term prospects and the top U.S. securities regulator called for a review of the problems surrounding its initial public offering last week.

The comments urging a review, by Securities and Exchange Commission Chairman Mary Schapiro, added pressure on the company, its underwriters and the Nasdaq, all of which have taken blame for the stock's troubled opening and subsequent sharp decline.

After Friday's nearly flat close and Monday's 11 percent plunge, the stock dropped as much as 9 percent in early trading on Tuesday before reversing some of the decline.

Facebook shares ended down $3.03 at $31 each.

The company has shed billions of dollars in market capitalization from its $38-per-share offering price last week.

Volume was again heavy, with 73 million shares changing hands. That followed turnover of 168 million shares Monday and 581 million on IPO day.

"There was a quick rush to exit yesterday, and when it broke the deal price it became self-fulfilling that there was going to (be) additional pressure," said Michael James, a senior trader at regional investment bank Wedbush Morgan in Los Angeles.

Investors were still shaking their heads over the botched opening trading of Facebook when Reuters reported late Monday that the consumer Internet analyst at lead underwriter Morgan Stanley cut his revenue forecasts for Facebook in the days before the offering.

JPMorgan Chase and Goldman Sachs, which were also underwriters on the deal, each revised its estimates during the road show as well, according to sources familiar with the situation.

One mutual fund source said they had never, in a decade of experience, seen an underwriter cut a company's outlook during the road show prior to an offering.

The SEC's Schapiro said investors should be confident in investing, but she conceded there were questions to answer.

"I think there is a lot of reason to have confidence in our markets and in the integrity of how they operate, but there are issues that we need to look at specifically with respect to Facebook," she told reporters as she exited a Senate Banking Committee hearing.

STILL OVERVALUED?

Brokers, who over-ordered shares expecting supply would be limited, continued to complain they received too much stock to handle and were left in the dark about forecast changes.

One Morgan Stanley Smith Barney adviser said that the fact that institutional investors received information that retail investors did not is "a huge issue for the entire industry.

"Night and day the institutional clients get things that we don't get. It's a big issue," the adviser said, adding there was surprise within the brokerage that Morgan Stanley, as lead underwriter, had not done more to support the share price.

As bad as the declines have been, though, a view persists that the stock remains overvalued.

Monday's closing price of $34.03 implied a 24 percent annual growth rate for Facebook earnings over the next 10 years — a rate that would rank above 90 percent of the companies in that industry.

Thomson Reuters Starmine, meanwhile, more conservatively estimates a 10.8 percent annual growth rate, which would value the stock at $9.59 a share, a 72 percent discount to its IPO price.

Similarly, the company's price-to-earnings ratio remains lofty, even after the selloff. The $34.03 price implies a forward P/E of 59, compared with Google's 13.3 forward price-to-earnings ratio (for a similar rate of growth).

TASKMASTER

Investors said the challenge for the young company is to prove it can grow at a rate that justifies its lofty valuation and demonstrates its maturity.

"Wall Street is a severe taskmaster and they're going to want to see quarterly results, then guidance, then subsequently they're going to want to see that guidance beaten, and then the guidance raised," David Rolfe, chief investment officer of Wedgewood Partners, said on Monday evening.

Besides the pressure on Facebook, there is also an intense focus on Nasdaq, which has shouldered much of the blame for the trading failures. The exchange has set aside money to compensate customers, but some on Wall Street are warning its ability to snag future big IPOs is at risk.

But Nasdaq shareholders gave the company a pass Tuesday — the exchange operator's annual meeting only lasted a few minutes and top executives did not get any questions at all on what went wrong with Facebook or what they were doing to correct it.

Barry Ritholtz, a widely followed financial blogger and the chief market strategist at Fusion IQ in New York, took all sides — Facebook, Morgan Stanley and Nasdaq — to task in the sharpest terms on his blog Tuesday.

"Thus, what we see are a series of bad decisions made by Facebook's executives going back many years. The insiders got greedy, too clever by half, in how they used secondary markets. They picked a bad banker and an awful exchange," Ritholtz said.