New low for Facebook shares as investors bail out

Early backers dump holdings in the social network three months after float

New York

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.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Guru Careers: Tax Manager / Accountant

£35 - £50k DOE: Guru Careers: A Tax Manager / Accountant (ACA / CA / CTA) is n...

Ashdown Group: Contracts Executive - City of London

£35000 - £37000 per annum + benefits: Ashdown Group: Contracts Executive - Cit...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K: SThree: SThree Group have been well esta...

Recruitment Genius: Call Centre Debt Collector - Multiple Roles

£21000 per annum: Recruitment Genius: This is an exciting opportunity to join ...

Day In a Page

Giants Club: After wholesale butchery of Idi Amin's regime, Uganda’s giants flourish once again

Uganda's giants are flourishing once again

After the wholesale butchery of Idi Amin's regime, elephant populations are finally recovering
The London: After 350 years, the riddle of Britain's exploding fleet is finally solved

After 350 years, the riddle of Britain's exploding fleet is finally solved

Archaeologists will recover a crucial item from the wreck of the London which could help shed more light on what happened in the vessel's final seconds
Airbus has patented a jet that could fly from London to New York in one hour

Airbus has patented a jet that could fly from London to New York in one hour

The invention involves turbojets and ramjets - a type of jet engine - and a rocket motor
Tate Sensorium: New exhibition at Tate Britain invites art lovers to taste, smell and hear art

Tate Sensorium

New exhibition at Tate Britain invites art lovers to taste, smell and hear art
10 best sun creams for kids

10 best sun creams for kids

Protect delicate and sensitive skin with products specially formulated for little ones
Ashes 2015: Nice guy Steven Finn is making up for lost time – and quickly

Nice guy Finn is making up for lost time – and quickly

He was man-of-the-match in the third Test following his recall to the England side
Ashes 2015: Remember Ashton Agar? The No 11 that nearly toppled England

Remember Ashton Agar?

The No 11 that nearly toppled England
Turkey-Kurdish conflict: Obama's deal with Ankara is a betrayal of Syrian Kurds and may not even weaken Isis

US betrayal of old ally brings limited reward

Since the accord, the Turks have only waged war on Kurds while no US bomber has used Incirlik airbase, says Patrick Cockburn
VIPs gather for opening of second Suez Canal - but doubts linger over security

'A gift from Egypt to the rest of the world'

VIPs gather for opening of second Suez Canal - but is it really needed?
Jeremy Corbyn dresses abysmally. That's a great thing because it's genuine

Jeremy Corbyn dresses abysmally. That's a great thing because it's genuine

Fashion editor, Alexander Fury, applauds a man who clearly has more important things on his mind
The male menopause and intimations of mortality

Aches, pains and an inkling of mortality

So the male menopause is real, they say, but what would the Victorians, 'old' at 30, think of that, asks DJ Taylor
Man Booker Prize 2015: Anna Smaill - How can I possibly be on the list with these writers I have idolised?

'How can I possibly be on the list with these writers I have idolised?'

Man Booker Prize nominee Anna Smaill on the rise of Kiwi lit
Bettany Hughes interview: The historian on how Socrates would have solved Greece's problems

Bettany Hughes interview

The historian on how Socrates would have solved Greece's problems
Art of the state: Pyongyang propaganda posters to be exhibited in China

Art of the state

Pyongyang propaganda posters to be exhibited in China
Mildreds and Vanilla Black have given vegetarian food a makeover in new cookbooks

Vegetarian food gets a makeover

Long-time vegetarian Holly Williams tries to recreate some of the inventive recipes in Mildreds and Vanilla Black's new cookbooks