View all newsletters
Receive our newsletter - data, insights and analysis delivered to you
  1. Technology
  2. Data
August 17, 2012

Facebook stock plummets to new low

The social network’s stock woes continue after early investors were given the OK to sell their stock for the first time.

By Tineka Smith


The ending of the lockout period for early investors saw an offload of more than 270 million shares on Thursday.

Facebook stock hit an all time low of $19.69, almost half of its initial price when the company debuted on Nasdaq at $38 per share in May 18.

The company’s $16bn IPO made it the largest technology IPO in history with shares initially priced at $38. Yet, sceptics were proven right as Facebook reported disappointing figures in its first earnings report since its IPO, which caused shares to tumble below $24.

The company reported a net loss of $157m in the second quarter compared to a net income of $240m in the same quarter a year ago.

The company’s second quarter loss was largely affected by share based compensation expenses for employees in the wake of its IPO, which totalled $1.3bn.

A large sell off of insider stocks could mean trouble for Facebook whose shares are already receiving doubts from investors about whether the company can quickly monetise its mobile platform.

Content from our partners
Rethinking cloud: challenging assumptions, learning lessons
DTX Manchester welcomes leading tech talent from across the region and beyond
The hidden complexities of deploying AI in your business

More than half of Facebook’s users access the site predominantly through mobile which the company told investors is a weak spot for the social network.

"We do not directly generate any meaningful revenue from mobile, and our ability to do so successfully is unproven," said Facebook in a pre-IPO filing.

The company’s value has now dropped to $40bn, almost 50% less than its market value when it went public on May 18.

Facebook will have to deal with another 247 million shares coming out of lockdown this year in October and another 1.2 billion in November.

Analysts say how Facebook stock continues to perform depends largely on showing investors that it can sell advertising on mobile devices as more its users switch from PC to mobile.

Please follow this author on Twitter @Tineka_S or comment below.

Websites in our network
Select and enter your corporate email address Tech Monitor's research, insight and analysis examines the frontiers of digital transformation to help tech leaders navigate the future. Our Changelog newsletter delivers our best work to your inbox every week.
  • CIO
  • CTO
  • CISO
  • CSO
  • CFO
  • CDO
  • CEO
  • Architect Founder
  • MD
  • Director
  • Manager
  • Other
Visit our privacy policy for more information about our services, how Progressive Media Investments may use, process and share your personal data, including information on your rights in respect of your personal data and how you can unsubscribe from future marketing communications. Our services are intended for corporate subscribers and you warrant that the email address submitted is your corporate email address.