Fin24

Facebook boss loses $4.7bn

2012-08-03 12:22

San Francisco – Facebook CEO Mark Zuckerberg has been hard hit by the selloff of Facebook shares.

Facebook shares continued their losing streak for a fifth day on Thursday, sending the once feverishly sought-after name below $20 for the first time as investors scrambled to get out of the way of a potential share deluge in coming weeks, Reuters reported.

According to cnet.com the share slump shaved some $4.7bn of Zuckerberg’s share in Facebook, an almost 32% drop in the past few days of trading. His stake now sits at around $10.1bn.

According to Reuters, Facebook has shed almost $50bn in value since its debut - more than the total valuation of Hewlett-Packard or Starbucks.

The stock debuted at $38 and hit $45 a share on the first day of trading but has headed south since, pummelled by growing doubts about its lofty valuation, growth prospects and high-profile departures.

The latest wave of selling started with social game maker Zynga spooking investors with its lousy earnings report last Wednesday, and continued with Facebook's own unspectacular earnings.

News that the some big boys have dumped the stock hasn't helped.

According to cnet.com the Wall Street Journal did some digging and found that Fidelity, one of Facebook's largest institutional investors, sold about 1.9 million shares across 21 of its mutual funds in June.

Worst to come?

Meanwhile, investors are struggling to understand the impact of the expiry on August 16 of a lockup period on insiders' sales.

That's when the first restrictions barring employees and early investors from selling goes away, opening a spigot to about 1.88 billion additional shares for trading by year's end, according to Reuters.

Reuters reported that lock-up expirations in internet stocks have a painful history for investors.

Groupon's stock fell 9% on the first day that some company insiders were allowed to sell shares, while Zynga saw its shares tumble 8% on the day its initial insider lock-up expired.

Facebook's first tier of restrictions goes away on August 16 when about 271 million shares will be available for trading, with another 243 million shares set to become available between mid-October and mid-November.

But the big day, according to Reuters, is November 14, when Facebook employees’ more than 1.2 billion shares will suddenly be available for trading.

- Fin24

* Follow Fin24 on Facebook, Twitter and Google+.



Comments
  • Luyanda - 2012-08-03 12:34

    Facebook should have made its shares available GLOBALLY. American Multinationals are shooting their own feet by disregarding non-American BUYING POWER eg. CATERPILLAR,the NASDAQ etc!

      vian.chinner - 2012-08-03 13:55

      Anybody can buy Facebook shares. You dont have to be US.

  • drew.maluleka - 2012-08-03 13:45

    I wonder how this will affecting the advertising revenue of Facebook? Advertisers might start to question the success rate of advertising on Facebook because investor confidence is critical to company success.

  • Steven Trollip - 2012-08-03 13:50

    FB sucks sick and tired of adverticements on my own wall of themselfs

  • jan.eksteen.1 - 2012-08-03 13:59

    Needless to say that bad press, like this, all across the world, does not help Facebook who base their income of the hype created through its social medium. This is bad for business and their image!

  • nigel.vanysendyk - 2012-08-03 14:38

    thats nothing the ANC government lost 5 Billion

      ant.duke - 2012-08-04 08:37

      Wow! Did they find the other 25 billion they've lost this year? They're not telling, hey...?

  • sello.molekwa.1 - 2012-08-03 15:27

    I think Facebook was a season-based kind of business. It was popular for a certain number of years but will wane as time goes and latest interests are developed elsewhere. Good initiative by Zuckerberg, but it was always going to be tough maintaining a big business on the foundation of online chatting. Internet users are fickle and get bored quickly. They won't stay on one thing forever.

  • imad.khokher - 2012-08-03 18:23

    He can still come back. The stocks just needs to rise a little less than $2 to add $1 billion to his net worth. Plus, today the shares are actually looking good, rising into the range of about $21.20, and hopefully will rise even more. So if the stocks get back into the 28ish range, which is possible, then he will gain back the $4 billion he lost.

  • Dakey - 2012-08-03 21:31

    Lol at anyone that actually bought FB shares. Company earned $1 billion at pretty much max size, yet valued 100 times that.

  • murray.campbell.980 - 2012-08-22 15:03

    I love it.. investors saw $$$$$ and loads of it, when will people realise that the .com bubble is just a pin prick away from bursting the social media bubble. Run away run away.

  • pages:
  • 1