After two straight days of getting hammered on the stock market, shares of Facebook are on the rise today, but that doesn’t mean the social media giant can breathe easy as the fallout continues from its controversial IPO.

Wednesday, a group of investors launched a class-action suit against Facebook and several of the underwriters who led the IPO. The suit, filed in U.S. federal court in Manhattan, claims investors have lost more than $2.5 billion since the IPO last week.

As of 1 p.m., Facebook shares were trading on the NASDAQ exchange at $31.85, a rise of 85 cents on the day. They’d earlier risen as high as $32.50.

“The true facts at the time of the IPO were that Facebook was then experiencing a severe and pronounced reduction in revenue growth,” the plaintiffs said in their lawsuit.

The suit also took direct aim at allegations underwriters downgraded their revenue forecasts for Facebook, but only told a select group of clients.

“Defendants failed to disclose that during the roadshow conducted in conjunction with the IPO, certain of the Underwriter Defendants reduced their. . . performance estimates for Facebook, which revisions were material information which was not shared with all Facebook investors, but rather, was selectively disclosed by defendants to certain preferred investors,” the suit said.

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Concern has been raised by the U.S. Securities and Exchange Commission as well as the Financial Industry Regulatory Authority that several underwriters downgraded their revenue forecasts for Facebook ahead of the firm’s IPO, but may have only disclosed that information to selected clients.

According to sources cited by Reuters news agency, those forecasts were lowered at Facebook’s own suggestion.

More bad news came in the form of a report by Bloomberg claiming that more than four per cent of Facebook’s outstanding shares might held by hedge funds or other people shorting the stock. Citing research firm Data Explorers Ltd., Bloomberg said 4.3 per cent of the 421 million Facebook shares on the market are borrowed. Short sellers will borrow a stock to sell them, with the expectation that the price of the share will fall, so they can buy them back more cheaply before returning the loan.

Wednesday’s suit comes on top of one filed against the NASDAQ stock exchange Tuesday for delays caused by technical glitches during the IPO.

Also Wednesday, two more analysts issued research reports on Facebook, with mixed opinions for the company’s prospects. Standard and Poors Capital IQ analyst Scott Kessler rates it a “sell,” with a 12-month target price of $30 per share.

“We see notable risks related to monetization, expansion, and corporate governance. Also, we think that in the Internet area generally and social-media segment more specifically, technologies and tastes are always changing and posing challenges to incumbent companies and offerings,” Kessler wrote in a report to clients.

On the more bullish side, Laura Martin of Needham Co. rates it a “buy,” with a 12-month target price of $40.

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