Facebook rushes to stop shares slide – Zuckerberg promises not to sell stock for a year

5 Sep 2012

Facebook CEO Mark Zuckerberg

In a move calculated to slow the descent of its share value, social network Facebook has moved to reassure investors. CEO Mark Zuckerberg in a regulatory filing has promised not to sell any stock in the company for at least a year.

The SEC filing also stated that two directors, Marc Andreessen and Donald Graham, won’t sell shares beyond what is needed to cover tax liabilities.

Facebook also plans to buy back around 101m shares when it issues restricted stock to staff in October, spending about US$1.9bn to keep those shares off the market.

The question is, will this be enough to halt the descent of the company’s share value?

Facebook went public on 18 May with a share price of US$38 and it peaked at US$45. However, since then, the shares have been in freefall. Last night, Facebook’s share price on NASDAQ closed at US$17.73, rallying to US$18.08 in after-hours trading.

The shares’ performance have not been helped by Facebook’s recent first public financial results, which showed the social networking giant founded by Zuckerberg just eight years ago is making losses of US$743m from operations and a net loss overall of US$157m from revenues of US$1.1bn.

It is expected that more than 2bn shares will become eligible for trading in the next 10 months, so the latest manoeuvres are calculated to shield the company.

Despite a user base globally of almost 1bn people, Facebook’s IPO ranks as one of the poorest-performing tech IPOs of all time.

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years