Early investors finally had the opportunity to sell their Facebook shares today, the company’s stock (NASDAQ:FB) sunk to its lowest price yet at $19.69 before closing down 6.23% to $19.87, its smallest closing price to date. Those are not milestones you want to see.
Facebook warned the market yesterday that there would be a downturn today. Today marks the first lockup expiration of Facebook’s gradual release of shares. Accel reportedly distributed a big portion of its stake to limited partners who then sold, and Facebook still has to endure the November expiration when long-time employees gain the freedom to sell.
About 271 million shares became eligible today from investors such as Microsoft, Accel Partners, Tiger Global Management, Goldman Sachs and Peter Thiel.
Back in May, its shares opened at just over $42. Since then, it has been a roller coaster ride for the share, with more downward slopes than expected.
The share price already dropped below $20 two weeks ago prompting some to ask whether it was cheap enough to start buying. But it still has far to potentially fall. As noted by WSJ’s Dennis K Berman, if it traded at Google’s same 14.7x earnings multiple on future earnings, $FB would be at $7.97.
So what should Facebook do? Read Josh Constine’s thoughts: Stay The Course, Facebook. Even If Your Share Price Crashes