Facebook shares plumbed new depths last night, as some of the investors who had backed the social network in its early days cashed out more of their holdings.
Almost three months after the company's disastrous debut on the public markets, 271 million additional shares became eligible for sale yesterday, and a wave of selling pushed the stock down to almost half the float price.
The early investors who sold some of their stake in May had been prevented from selling any more for 90 days, but the huge volume of trading after the Nasdaq market opened yesterday suggested that at least some were taking the first available opportunity to get out.
More than twice the average daily volume of shares had changed hands in just the first hour of trading.
The stock hit a new intra-day low of $19.69, valuing the company at $54bn (£34bn), compared to $104bn at $38 per share at its debut.
Facebook executives had attempted to persuade early investors to hold back from taking advantage of the expiry of the lock-up, in a series of meetings over recent days.
Among the investors eligible to sell more are Accel Partners, a venture capital firm that first put money in when the social network was still calling itself "thefacebook.com", and several angel investors such as Peter Thiel, the PayPal founder, and Reid Hoffman, who created LinkedIn. Goldman Sachs, Microsoft and Elevation Partners, the venture capital firm of U2 frontman Bono, are also eligible to sell. Many of these are still sitting on healthy profits from their investment, in stark contrast to the retail and institutional investors who clamoured to get shares in the stock market float in May.
Mark Zuckerberg, whose stake in the company has collapsed to below $10bn from $19.1bn at the time of the flotation, was not eligible to sell any stock yesterday. It will several days before the selling investors have to publicly declare the change in their holdings.
The Facebook flotation has gone down as one of the most disastrous in the tech industry's history.
Technical glitches at Nasdaq caused confusion during the opening of trading on 18 May, spoiling what Facebook's bankers had hoped would be robust demand for the shares in the after-market. It also quickly became clear that the company's revenues were suffering because users are increasingly going to Facebook via their mobile phones, where there is less screen space than on a computer to display ads. Growth in advertising revenues has proved slower than expected, and Mr Zuckerberg has warned investors that he will not jeopardise users' loyalty by cramming the Facebook mobile app full of ads.
Facebook and its pre-float investors sold just 421 million shares in the initial public offering, less than 20 per cent of the company, meaning that almost 2 billion more will be dribbling into the market over the nextyear, as successive lock-ups expire.