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.