Facebook shares plunge to record low | Good Morning Silicon Valley

Facebook shares are trading at a record low today as several analysts cut their price targets for the company’s stock. Shares were down nearly 5 percent to $18.15 as of this post, lower than the $19 mark — or half the stock’s initial trading price of $38. The company now has a market capitalization of $40.89 billion; it went public in May with a valuation of more than $100 billion.

Thursday, a market research firm that the New York Times says has been “superbullish” about Facebook lowered its estimates for the Silicon Valley social-networking company’s sales this year, from $6 billion to $5 billion.

“EMarketer estimates that, while robust growth rates will continue for the foreseeable future, advertising revenues at Facebook will not fly as high this year as earlier predicted,” the firm said in a press release.

Besides the ad-revenue questions, there are also those pesky lockup expirations. Facebook’s first lockup expiration a couple of weeks ago, which allowed early investors to sell their shares, further weakened its stock. (See Facebook shares continue ‘painful’ decline.) A couple of notable names who have sold their shares: the company’s earliest backer, Peter Thiel, and Facebook co-founder Dustin Moskovitz.

“Facebook has multiple lockup expirations over the next year, and recent selling activity on the August lockup suggests to us the risk of future selling pressure,” wrote Bank of America’s Justin Post in a research note, according to MarketWatch.

The Mercury News’ Brandon Bailey recently wrote about the possible effect of those expirations, and subsequently Facebook’s stock plunge, on the company. At least one expert told Bailey that executives may have to leave Facebook if the Wall Street woes persist. But the article also points out that CEO Mark Zuckerberg controls a majority of the company’s voting shares. Chris O’Brien blogs that other top executives are more likely to feel the heat, namely COO Sheryl Sandberg or CFO David Ebersman. But it has been less than four months since the company went public, and Business Insider’s Henry Blodget points out that Zuckerberg’s IPO letter had stressed the long term.




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