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Facebook shares sink even lower as analysts fear more sell-offs Facebook shares sink even lower as analysts fear more sell-offs
(about 2 months later)
Facebook's shares hit new lows Friday as analysts worried the social network's insiders may be preparing to sell yet more stock.Facebook's shares hit new lows Friday as analysts worried the social network's insiders may be preparing to sell yet more stock.
The company's share price reached a low of $18.03 on Friday before ending at $18.08, down 5.28% for the day. Facebook's shares are now worth less than half the $38 price they were sold for in May.The company's share price reached a low of $18.03 on Friday before ending at $18.08, down 5.28% for the day. Facebook's shares are now worth less than half the $38 price they were sold for in May.
The latest fall came as two analysts from firms associated with May's troubled initial public offering (IPO) cut their price targets on the shares.The latest fall came as two analysts from firms associated with May's troubled initial public offering (IPO) cut their price targets on the shares.
Bank of Montreal (BMO) analyst Daniel Salmon cut his target for Facebook's shares from $25 to $15 – the lowest rating of his peers – and warned the company may struggle to meet a 4% revenue-growth target in the third quarter.Bank of Montreal (BMO) analyst Daniel Salmon cut his target for Facebook's shares from $25 to $15 – the lowest rating of his peers – and warned the company may struggle to meet a 4% revenue-growth target in the third quarter.
Bank of America analyst Justin Post cut his target on the shares to $23, arguing the company had good long-term prospects while citing concerns about the looming expiration of "lockup" agreements that prevented some early investors and company insiders from selling shares.Bank of America analyst Justin Post cut his target on the shares to $23, arguing the company had good long-term prospects while citing concerns about the looming expiration of "lockup" agreements that prevented some early investors and company insiders from selling shares.
Facebook's shares fell 6.3% after the expiration of its first lockup agreement in mid-August freed up some 271m shares for sale. Legendary Silicon Valley investor Peter Thiel, the first big outside investor in Facebook and a company director, used that opportunity to sell more than 20m shares, most at $20 a share. Co-founder Dustin Moskovitz has shed 1.35m shares at prices ranging from $18.79 to $20.08, adding $26.2m to his fortune.Facebook's shares fell 6.3% after the expiration of its first lockup agreement in mid-August freed up some 271m shares for sale. Legendary Silicon Valley investor Peter Thiel, the first big outside investor in Facebook and a company director, used that opportunity to sell more than 20m shares, most at $20 a share. Co-founder Dustin Moskovitz has shed 1.35m shares at prices ranging from $18.79 to $20.08, adding $26.2m to his fortune.
Post was more positive about the company's long-term prospects from new advertising formats but wrote "recent selling activity on the August lockup suggests to us the risk of future selling pressure".Post was more positive about the company's long-term prospects from new advertising formats but wrote "recent selling activity on the August lockup suggests to us the risk of future selling pressure".
Facebook's next lockup expiration comes on 15 October, when another 249m shares will be freed up. The largest expiration comes on 14 November, when co-founder and largest shareholder Mark Zuckerberg and others will be free to sell 1.32bn shares. More shares will also be released in December and in May next year.Facebook's next lockup expiration comes on 15 October, when another 249m shares will be freed up. The largest expiration comes on 14 November, when co-founder and largest shareholder Mark Zuckerberg and others will be free to sell 1.32bn shares. More shares will also be released in December and in May next year.
On the day of its IPO Facebook was briefly valued at $104bn, more than the market value of Goldman Sachs and Nike added together. On Friday Facebook was valued at $38.69bn, less than Nike's $44.19bn.On the day of its IPO Facebook was briefly valued at $104bn, more than the market value of Goldman Sachs and Nike added together. On Friday Facebook was valued at $38.69bn, less than Nike's $44.19bn.
Comments
14 comments, displaying first
31 August 2012 11:15PM
My words are more valuable than facebook. $65.4B lost in three months?! The company 'produces' nothing as far as am concerned. Just keyboard letters flying everywhere. Food/OIL these are tangible investments. Apple is next.
http://www.guardian.co.uk/technology/2012/may/17/facebook-ipo-key-players
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31 August 2012 11:24PM
This is delightful news. Maybe the marketplace can confirm what is blindingly obvious to some of us already: no real product = no value. And then maybe we can get back to more important things. like real friendship with real people.
Gotta run: my kohlrabi is ripening fast over on Farmville.
Just kidding.
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31 August 2012 11:37PM
We must have learned from the mistakes of the Nasdaq bubble and not invested all our savings in a company with no assets, unrealistic ad revenue targets and designer office chairs.
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1 September 2012 12:31AM
Used to use FB to keep up with the younger members of the family abroad. Now I can't stand it.
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1 September 2012 12:45AM
Dear editor, please update http://www.guardian.co.uk/technology/interactive/2012/may/18/facebook-shareholders-live-interactive?INTCMP=ILCNETTXT3487
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1 September 2012 1:04AM
An anecdotel story comes to mind. A simple villager went to county fair, some one picked his pocket and rob him of everthing. When he went back home, everyone asked, how was the fair? He replied, what fair, the whole thing was to rob me of my money.
Same thing applies to these companies, under writers and pundit will hype these things so much, that simple minded people get into their trap.
I do not have or intend to own stocks in any company. But the common sense dictates that this cpmpany stock should not have been priced more than Nine Dollars, based on its US membership, who could be source of possible revenue. Worldwide membership of 900 million p-lus, does not mean a thing.
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1 September 2012 2:41AM
The price goes down because a couple of "analysts" decide to force it down. I know that people hate Facebook, but you should remember that they still generate 4.1 billion dollars of profit with unheard of profitability.
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1 September 2012 5:43AM
"The company 'produces' nothing as far as am concerned."
Entire neoliberal economies are built on non production.
Here's how it works: produce overseas with government assistance and ownership, thus shrinking wages in the neoliberal "free trade" economy; invest in intellectual property in a digital age; react with shock and dismay to shrinking demand.
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1 September 2012 8:01AM
FB stock was always a ridiculous "investment". However, (like it or not) Apple actually makes things, and sells them, and people keep buying and buying and buying and buying them......no end in sight so far. Don't sell your apple stock just yet.
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1 September 2012 10:53AM
There will be a lot of schadenfreude around when FB fails.This will happen just as it did to Myspace.......
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1 September 2012 4:26PM
"Apple actually makes things, and sells them, and people keep buying and buying and buying"
The Chinese dictatorship controls the cost and means of production, especially labor, so parasitic companies like Apple can get obscenely wealthy. Informed people wouldn't give Apple a dime. I have NEVER bought Apple products because I despise them and would proudly urinate on Jobs grave had I access to it.
Link to this comment:
1 September 2012 9:26PM
I find it hard to reconcile the size of the funds involved with the stupidity of the people who are 'investing' them.
Link to this comment:
1 September 2012 10:11PM
As Facebook's growth rate is slowing, and has been for a few quarters even before going public, the share price is belatedly catching up to this fact.
However you talk of a valuation of $ 38 billion. Actually it seems to me that the valuation is closer to $ 50 billion based on Friday's closing price of $ 18 approx. All the shares eligible for sale total 2.7 billion, which if multiplied by the $ 18 share price equates to nearly $ 49 billion. Are you considering some of these future shares are options rather than shares and might not be exercised because they are "out of the money"?
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2 September 2012 3:59PM
Mark my words; it will drop further.
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Comments on this page are now closed.
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Company share price now worth less than half the $38 IPO price set in May as insiders may be preparing to sell more stock
Facebook's shares hit new lows Friday as analysts worried the social network's insiders may be preparing to sell yet more stock.
The company's share price reached a low of $18.03 on Friday before ending at $18.08, down 5.28% for the day. Facebook's shares are now worth less than half the $38 price they were sold for in May.
The latest fall came as two analysts from firms associated with May's troubled initial public offering (IPO) cut their price targets on the shares.
Bank of Montreal (BMO) analyst Daniel Salmon cut his target for Facebook's shares from $25 to $15 – the lowest rating of his peers – and warned the company may struggle to meet a 4% revenue-growth target in the third quarter.
Bank of America analyst Justin Post cut his target on the shares to $23, arguing the company had good long-term prospects while citing concerns about the looming expiration of "lockup" agreements that prevented some early investors and company insiders from selling shares.
Facebook's shares fell 6.3% after the expiration of its first lockup agreement in mid-August freed up some 271m shares for sale. Legendary Silicon Valley investor Peter Thiel, the first big outside investor in Facebook and a company director, used that opportunity to sell more than 20m shares, most at $20 a share. Co-founder Dustin Moskovitz has shed 1.35m shares at prices ranging from $18.79 to $20.08, adding $26.2m to his fortune.
Post was more positive about the company's long-term prospects from new advertising formats but wrote "recent selling activity on the August lockup suggests to us the risk of future selling pressure".
Facebook's next lockup expiration comes on 15 October, when another 249m shares will be freed up. The largest expiration comes on 14 November, when co-founder and largest shareholder Mark Zuckerberg and others will be free to sell 1.32bn shares. More shares will also be released in December and in May next year.
On the day of its IPO Facebook was briefly valued at $104bn, more than the market value of Goldman Sachs and Nike added together. On Friday Facebook was valued at $38.69bn, less than Nike's $44.19bn.