Facebook's new low
Facebook founder Mark Zuckerberg has vowed not to sell his shares in the company for at least twelve months, in a bid to restore investor confidence.
The announcement came as shares in the social network hit an all-time low of $17.55 (£11.08) yesterday. It marks a drop of over 50 per cent since the IPO in May 2012, when shares hit the market at $38. As a result, analysts have wiped around $50bn off the estimated value of Facebook in under six months - which according to Bloomberg, makes it the worst performing IPO since records began.
One of the factors that has contributed to the slump is the expiration of lock-up periods that prevented employees and insiders from selling their stock. Since August 16, board member Peter Thiel has unloaded $400m of shares, while Dustin Moskovitz - Facebook's co-founder - sold shares amounting to $34.5m, just over 1 per cent of his stake. Future lock-up expirations will free up over a billion more shares that could cause stock to drop even lower.
The CEO has around 444 million shares in the company, so his pledge to keep hold of them is a strong statement; shares rose 2 per cent to $17.73 following Zuckerberg's announcement. However, Facebook has also been levied with a hefty $2bn tax bill; instead of selling shares to cover this, Reuters reported the company plans to use existing cash and credit.
Natalie Booth, online marketing manager at theEword, said: "The numbers must be worrying for Facebook investors, so Zuckerberg's decision to keep hold of his shares may be encouraging. However, to truly reassure investors and reverse the decline, action will need to be taken over the coming months to further monetise Facebook membership and user engagement."