Mark Zuckerberg concedes that Facebook stock plummet is 'painful' to watch

The Facebook IPO was one of the most anticipated tech IPOs in recent memory. But over the past few weeks, shares of the world's most popular social networking site have continued to fall lower and lower.

The Facebook IPO, spearheaded by Morgan Stanley as the underwriter, was one of the most anticipated tech IPOs in recent memory.

The stock opened up on the NASDAQ on May 18 in the $38 range and quickly dropped down to the low $30 range where it vacillated between about $25 a share and $31 a share for a number of weeks.

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But as July began to wind down, the stock continued its free-fall. First to $23 a share, then to $20, and by the time August rolled around, shares of the world's most popular social networking site were trading at sub-$20 levels.

As of today, the stock is trading at $19.46 a share with a P/E ratio of 108. Investors sure must be confident in the company's prospects when you consider that a company like Apple - with billions in profits quater after quarter - has a relatively measly P/E ratio of $15.23.

And lest you think this is going unnoticed over at Facebook, think again.

While Mark Zuckerberg has never been one to focus on Facebook's share price, the Wall Street Journal notes that the Facebook CEO couldn't help but acknowledging the steep decline of his company's stock during a recent company-wide meeting.

But in a company-wide meeting earlier this month, he conceded that it may be "painful" to watch as investors continue to retreat from Facebook's stock, according to people familiar with the meeting.

The meeting was part of a new effort over recent weeks to buck up morale.

Overall, shares of Facebook have fallen nearly 50% since its IPO but some Facebook employees won't be able to sell their shares for some time due to various regulations which prohibit employee sales until specified time periods, depending on a number of factors.

The Journal adds:

Lockup expirations in October, November and December will allow Mr. Zuckerberg and other employees to sell more than 1.4 billion shares. The biggest lockup expiration, freeing more than one billion shares, is set for Nov. 14. The last lockup expires next May.


Earlier this month, Mr. Zuckerberg began a companywide meeting by saying he doesn't want to open meetings talking about the stock price, since volatility is to be expected, but he said he wanted to acknowledge that the stock's slump is "painful" for some employees, according to people familiar with the meeting.

Mr. Zuckerberg went on to tell employees that the press doesn't know the company's future plans, and if they did, they would have the same faith in Facebook's ability to fulfill its lofty stock-market valuation. He said that investments the company has made over the last six to 12 months will soon bear fruit, the people said.

In Zuckerberg's IPO prospectus, you might remember that Zuckerberg stated that the cmopany doesn't "build services to make money" but rather makes money "to build better services."

A noble credo, to be sure, and indeed, it sounds an awful lot like the party line from Apple. But if the share price continues to tumble downards, Zuckerberg might soon have to start worrying about making money sooner rather than later.

via WSJ

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