After three months of their Initial Public offering, the share value has gone down by more than 40% of their actual offered value and closed at under $21.81 on last Friday whereas the initial price was $38 on May 18.
The stock started to plunge after its entrance at the Wall Street and the technical errors of this offering were blamed at first. According to shareholders, these issues didn’t create stock’s subsequent dip. They said, “The decline can be reason of many factors like total size as well as offering’s price in addition early exits of key investors and the slowing economic growth.”
Not only this, the stock seems to be doomed by Facebook’s myths.
But the main investors remain optimistic. Facebook is more profitable than any other site because e it can capture more customer interest than other site do. As well as it is experiencing with some new ways to gather advertising and this is its main source of generating revenue. This month, Facebook has offered application developers to focus on ads and make diversification by opening online gambling site in Britain.
A professor of Harvard Business School, David B. Yoffie said, “It becomes a company which is perceived as weak rather than unbeatable.” He is a consultant of many technology companies. According to his statement, no company can compete with Facebook.
The executives of Facebook said that they always focus on expanding their business and making profit. They don’t want to say anything on the price of stock. However, at the late July, Company’s chief financial officer, Davis Ebersman said, “We are disappointed in the stock price dive.”
One Facebook employee said that other employees should cash in the stock option as early as they can and he also predicted the stock affliction may create problems in retaining and hiring talents. He didn’t own Facebook stock for long time.
That employee also stated that many big company’s main investors has sold out a big portion of their share at a very high rate.
The co founder of Facebook, Mark Zuckerberg sold out a portion of his company’s share in this offering for meeting his bill of taxes. Everyone says that the early investors sold out more than $9 billion in the share. They still hold a noteworthy amount.