July 2012

What does Facebook's stock plunge mean?

Tech Wreck 2.0...

Facebook had its stock price fall after the release of a poor earnings report and analysts will be quick to point out to investors that the announcement of more new shares being issued will only make the stock plunge further. Experts have watched the most talked about company in the planet have its stock price fall almost 38 percent since its much awaited IPO in May.

Facebook has also come under criticism for the way its IPO was handled and it has made its employees locked into holding the shares so as to avoid a perception that everyone is heading for the exit. This usually happens when an employee has a sudden increase in paper wealth that is tied solely to a price of a stock. The employee could be wealthy because of the stock price and the shares issued, but may still be renting an apartment and have other bills due making the employee want to sell stock as quickly as possible.