Yesterday Facebook's stock fell below $20.00 ending the day at $20.04, an all-time low for the ever-shrinking stock. Although just an arbitrary numerical marker of Facebook's continued descent, the nice round number, which would be down 47 percent from its $38 IPO debut, gives us a moment to reflect on what all this lost value really means.
What it means for Facebook:
The company's value has fallen almost $50 billion since its $100 billion IPO. Though the finance sites, like Google Finance, peg the number at $38 billion, it's actually not that low, as Business Insider's Henry Blodget shows in his thorough breakdown of the numbers. At this $20-ish stock price the value comes in around $58 billion, which is still a big fall since the stock debut in May. That is a lot of lost money. But people shouldn't start really worrying until $16.28, the number where Facebook will equal the amount Microsoft offered to buy Yahoo in 2008. That's just embarrassing.
A lot of this falling is attributed to the poor earnings report Zynga put out last week, followed by the mediocre one the social network gave us. The Wall Street Journals tells us its because the company still hasn't proven its mobile strategy. But the tech blog loyalists, like TechCrunch's Alexia Tsotsis, still have faith in the growing social network. "Can someone please teach me how to buy Facebook stock now please? Because I believe in the future and you should too," writes Tsotsis. And, if you're of that optimistic variant, the stock really is a bargain deal now.
What it means for people who bought stock in Facebook:
Speaking of good deals, that is exactly the opposite of what people who bought stock on day one got. The average price that day was $40.527, as Reuters's Felix Salmon points out. People who bought on that day have lost half their money. Pretty much anyone who has purchased FB in the last two months has hurt, with the stock falling 47 percent in the last 50 days, as Bloomberg's Jon Erlichman points out. Though, perhaps these people got what they deserved. Some analysts have been saying all along that the proper trading price was in the $16-$20 range. And, not everyone lost out. The VCs who cashed out early did well, notes Reuters.
What it means for Mark Zuckerberg:
Hold yourselves together: Zuckerberg is no longer among the top ten richest tech billionaires, reports Bloomberg's Peter Newcomb and David de Jong. His wealth comes from the 503.6 million shares of Facebook he owns. So, as you can imagine, he hasn't had the best financial few months. Though, we shouldn't feel so bad. He is still a billionaire -- just a lesser one. From the $19.8 billion he started with, he now is at a sadder $10.2 billion.
What it means for California.
As much as some people just want Facebook to fail, its a big business whose failure has effects outside of Facebook. (Though much of it is contained.) The state estimated earning between $1.4 billion and $1.9 billion over the next 13 months from taxes related to the stock. But that was based on a $35 per share price. Woops! The state now estimates it will have a few billion defect because of the fall, reports The Associated Press.
What it means for other social media companies?
Analysts are calling the bubble popped. "A lot of these companies are going to make a quick buck and flame out," Peter Schiff, chief executive of Euro Pacific Capital told Reuters. "Just look at 10 years ago."