| Facebook selling spree continues |
SAN FRANCISCO Facebook shares sank as much 4.3 per cent on Friday to set a new low, a day after early investors got the green light to sell for the first time.
More than 270 million shares owned by the early investors became available for trade on Thursday after a 3-month curb on sales ended. That’s more than one-half the 421 million shares sold in its initial public offering on May 18.
On Thursday, Facebook shares fell 6.3 per cent to a record closing low.
The company founded by Mark Zuckerberg in his Harvard dorm room became the only US company to debut with a market value of more than $100 billion.
But investors have since grown disillusioned with Facebook’s inability to articulate a plan to reverse slowing revenue growth - due in large part to its limited mobile advertising efforts - sending the stock down almost 50 per cent from its $38 debut. Many investors remain unnerved by the massive flood of shares still waiting to be released: More than 1.4 billion additional shares will be eligible for selling by year’s end, nearly tripling the amount available for trade.
Analysts say Thursday’s frenetic trading offers a taste of what may transpire in November, when many of the social network’s employees get to cash in stock awards for the first time. “An incredible amount, all the shares coming,” said Steve Birenberg, president of Northlake Capital Management and portfolio manager for Entermedia Growth Partners, a hedge fund.
“It’s important because it adds to the negative sentiment. You’ve got a big overhang of stock, you’ve got decelerating growth ..., everything out there now is sort of spun negatively.”
With Thursday’s selloff, Facebook has lost almost $50 billion, or just under half, of its value since its IPO. The stock, which debuted at $38, fell as much as 7.1 per cent to a all-time low of $19.69 before ending the day at $19.87.
Reuters
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