At one point on Thursday, Facebook’s shares fell to a record low of $19.69.
Stock market analysts had been bracing themselves for just such a scenario as the first lock-up period, during which early investors are unable to sell stock, expired. That is, those who were early investors in Facebook — including Accel Partners and Goldman Sachs — have now become able to sell their 271 million shares, on top of the 421 million already in circulation.
Even more shares could be cast upon the market in the upcoming months as more lock-ups expire. By November 14, investors will be able to sell 1.32 billion shares.
Facebook CEO Mark Zuckerberg, while still a billionaire, lost some $600 million on Thursday so his net worth is “only” $10.2 billion.
As often repeated, Facebook has yet to prove that its store of personal data from 955 million users can be turned into a profit. The social media company continues to gain the lion’s share of its revenue from advertising and payments from virtual games played on its platform; it is trying out some new ways to make money including offering online gambling to users in the UK and some new advertising tools.
Doubts remain about Facebook’s ability to generate ad revenue as more and more people access the site from mobile devices which, with their smaller screens, make advertising more challenging to integrate.
“Facebook was not originally created to be a company. It was built to accomplish a social mission — to make the world more open and connected.”
As a mission, this sounds great and that’s why millions have flocked to Facebook and are using it right now. Facebook, it could be said, is a great idea and a great site enabling people to be and stay “connected.”
But can a publicly-traded company flourish (i.e., please its investors), let alone survive, on such noble — idealistic — principles?
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