Tuesday, May 22, 2018
Business

Facebook shares hit new low, about half of $38 IPO price

SAN FRANCISCO — Facebook's stock plunged to a new low Thursday as some of the social networking leader's early backers got their first chance to sell their shares since the company's May 18 initial public offering went awry.

Shares in Facebook, whose IPO was priced at $38 — which had valued the company at $104 billion — traded as low as $19.69 on Thursday before bouncing back slightly. They closed at $19.87, down $1.33, or more than 6 percent. The previous low during the day was $19.82 and the previous low for a close was $20.04, both reached Aug. 2.

Analysts interpreted the unusually high trading volume as a clear sign that at least a few of the insiders were seizing on a fresh selling opportunity. That is stirring a debate over whether they're simply locking in long-awaited gains on investments made many years ago or bailing out of a company that has lost its luster.

A breakdown on how many major Facebook shareholders sold their stock probably won't be available until next week at the earliest. Securities regulations give them at least three days before they have to disclose such transactions.

All told, investors who owned a combined 271 million Facebook shares could have sold their holdings Thursday with the expiration of a ban known as a lock-up period. The restrictions were imposed on a group of venture capitalists, companies and Silicon Valley cognoscente who invested in Facebook during its formative years and sold some of their holdings three months ago when the company went public.

More than 156 million shares were traded, more than five times the stock's average volume over the past month.

It has been a rough run for Facebook. After one of the most-anticipated IPOs in history, Facebook had perhaps the most-botched stock market debut as glitches marred its first day of trading. Things have gotten progressively worse as Facebook's market value has plunged by about $49 billion.

The downfall stems from doubts about Facebook's ability to fend off intensifying competition from Internet search leader Google while trying to develop a plan for increasing the amount of revenue that it brings in from a worldwide audience of 955 million users.

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