Facebook CEO Promises Not to ZUCKER PUNCH Investors
Since going public in May, Facebook’s (NASDAQ:FB) stock price has been cut in half. Many retail investors that purchased shares following the social media giant’s debut on the Nasdaq feel like they have been suckered punch in the wallet by the latest Wall Street scheme. However, shares are seeing signs of life today as Facebook’s CEO promises not to zucker punch investors for at least 12 months.
According to a late Tuesday filing with the Securities and Exchange Commission, Mark Zuckerberg has no intention of selling any of his Facebook shares when a lockup expires in late October. In fact, he plans on keeping his shares in the company for at least one year. Zuckerberg is Facebook’s largest shareholder, with about 444 million shares of Class B common stock and an option for an additional 60 million Class B shares. Two directors, Marc Andreessen and Donald Graham will both sell shares, but only enough to settle tax obligations.
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Facebook also announced that it will basically buy back 101 million shares to cover tax charges when it issues previously restricted stock units to employees. This will decrease the number of shares employees would likely sell in the open market to cover tax expenses, as well as reduce Facebook’s float and aid its earnings per share figure. Larry Yu, a Facebook spokesman, said the plan was approved by the company’s compensation committee at the end of August. “We wanted to get the filing out as soon as we could after that meeting as a measure of clarity and transparency,” he explained.
The filing came just in time. On Tuesday, shares of Facebook hit a fresh all-time low of $17.55, representing a 54 percent plunge from the company’s initial public offering price of $38. Groupon (NASDAQ:GRPN), another over-hyped Internet IPO, also hit a new record low of just $4 a share yesterday.
On Wednesday, the positive Facebook news sent shares of the social juggernaut more than 4 percent higher. Other social names such as LinkedIn (NYSE:LNKD), Zynga (NASDAQ:ZNGA) and Yelp (NYSE:YELP) also surged higher.
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