Loading...
See More

Zuckerberg loses almost $2bn

May 21 2012 17:30 guardian.co.uk

Related Articles

Privacy issues lurk as Facebook lists

Facebook off to a flyer on Nasdaq

Zuckerberg to ring IPO opening bell

Facebook sets richest tech IPO in motion

Facebook goes public at $38 per share

Facebook shares on rollercoaster ride

 
MARK Zuckerberg's fortune dwindled by nearly $2bn to $18.7bn within minutes on Monday as trading began again in Facebook shares – which promptly plunged by nearly $5, or more than 10%, from their Friday closing price of $38.23.

Pre-marketing trading had seen heavy selling of the stock, which was supported just above its $38 listing price on Friday afternoon by the underwriters at the major banks who bought shares ahead of the flotation.

Zuckerberg's fortune, based on his shareholding, stood at $18.95bn at Friday's $38 offer price. But within minutes of the shares going on sale again without the support of underwriters, they were in freefall, and were soon trading below $34.50.

Within half an hour, they had lost $5 from Friday's closing price.

Henry Blodget, the former Wall Street analyst who ahead of the IPO called the shares "muppet bait", said on his Business Insider site that the lack of "pop" was probably good news for millions of small investors, who were thus not encouraged to pile into the stock.

He reckons that a fair value for the company would be somewhere between $16 and $24 a share, depending on its results.

That would value it at between $50bn and $85bn – a substantial amount, but far from the $104bn that the $38 share price put on it.

Investor sentiment cooled over the weekend after seeing the lack of "pop" – a spectacular jump in price – for the shares on Friday.

Having been listed at $38, with a greater number offered due to "high demand", the shares then began trading on Friday – after an embarrassing glitch – at $42.02. But they soon came off that level, to settle at the closing price.

By Monday, sentiment had turned against Facebook so thoroughly that underwriters seeking to unload the shares were forced to take substantial losses as the market marked the shares down.

Having seen a number of investment funds buy the shares on Friday, as fund managers loaded up in the expectation that Facebook would bring a boost to their portfolio, the remaining buyers in the market on Monday were less willing to pay a premium – leaving the underwriters with no option if they wanted to pass the shares on.
mark zuckerberg  |  facebook
NEXT ON FIN24X

 
 
 

Read Fin24’s Comments Policy

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
7 comments
Add your comment
Comment 0 characters remaining
 

Company Snapshot

We're talking about:

Small Business

New forms of digital technology are changing the very ways in which entrepreneurs run their businesses.
 
 

New GIF keyboard on iOS for added fun!

Soon sending an LOL! or facepalm will be so much more fun!

 
 

For chic geeks...

Puppy goes crazy over iPad game
Printable solar panels will bring exciting new opportunities!
Now there’s a special lane for texting while walking
LOL! 7 brutally honest texts from parents

Money Clinic

Money Clinic
Do you have a question about your finances? We'll get an expert opinion.
Click here...
Loading...