Facebook employees dump shares as company’s stock prices continue to tumble
Facebook has been taking a beating from Wall Street since its IPO in May, and now the social networking service is facing yet another dilemma. Many employees that had their shares locked up until Monday dumped a lot of shares on Wednesday.
In May, Facebook’s initial offering price was $38, but that has fallen by nearly half. Employees that were supposed to be millionaires and even billionaires became less and less inclined to hold onto their shares as the company’s value continued to decline.
Back in August, co-founder of PayPal and an early bird investor in Facebook, Peter Thiel sold the majority of his shares and netting over $1 billion in cash (not bad for a $500K initial investment). He also made $640 million after selling 16.8 million shares during the IPO. IPO investors, on the other hand, are not so lucky compared to Thiel.
So instead of waiting it out and risking further devaluing of their shares, many Facebook employees have decided that they’re better off cashing in now before the social networking giant dips to an even lower level.
It was rumored shortly after Facebook’s IPO that perhaps the firm would dive into hardware with a smartphone, and prove to investors that there’s something ‘tangible’ to keep the company sustainable. That, however, quickly became an afterthought when CEO Mark Zuckerberg came out and said that a Facebook-powered smartphone wouldn’t make any sense, and that the firm would continue with its core business model—that is, profiting from ad revenues on its social networking platform.
Facebook will face the possibility of another massive dump on November 14 when employees can sell 777 million more shares. ‘777’ can either make it or break it for a lot of slot machine players, but it doesn’t seem like Facebook will be hitting the ‘jackpot’ at this rate.