Mark Zuckerberg may have conquered the internet at a young age, but investor's doubts about Facebook have seen his personal fortune drop by $9 billion.
In the three months since Facebook was publicly floated, stocks have fallen by 6.3 percent, after 271 million shares were released overnight, effectively wiping $9 billion from the entrepreneur's personal fortune. When the company launched on the stock market in May, Facebook released 421 million shares at $38 to raise a record $16 billion. At the time of the float, Zuckerberg's 22 per cent stake in the company was said to be worth $19.1 billion.
Author of "The Facebook Effect", David Kirkpatrick, told Bloomberg that "the market is not convinced of Facebook's future." When asked to speculate about Zuckerberg's feelings, he had his doubts that he was personally concerned by the dive in value.
"He thinks of it only in terms of how it affects the company's strategic and tactical opportunities," Mr Kirkpatrick said.
Facebook's stock plunged after some initial investors took advantage of the expiration of the "no sell" period. Those eligible to sell additional shares overnight were the investors and directors who had participated in the May IPO. The exception was CEO Mark Zuckerberg, who will be ineligible until November.
Other shareholders, including many Facebook employees, will be able to sell beginning in October. The last lockup period expires next May, a year after the IPO.
In all, up to 1.91 billion more shares could flood the stock market over the next several months – more than four times the amount offered when the company went public. What this will do for the value and public image of Facebook, we can only speculate.
Facebook's stock dipped as low as US$19.69 before rebounding to US$19.99 in overnight trading. If the stock hits U$S19, it will have lost half its value in three months.
Facebook is doing it tough at the moment. Investors remain concerned about Facebook's ability to keep increasing revenue and make money from its growing mobile audience, even as many analysts hold positive long-term views.