Monday, August 6, 2012

Facebook's Stock Crash Has Created A Bunch Of New Problems For The Company...

Facebook's stock crash has done more than blindside investors who figured that no price was too high for the IPO.  Businessinsider’s own Henri Blodget reports that the crash has also created a bunch of new problems for the company:

A.     Lock-up releases will likely lead to hundreds of millions of new shares being dumped on the market over the next six months ... and Facebook can no longer do a simple "follow-on offering" to manage this process.
B.     Facebook faces a massive ~$3 billion tax bill related to its employee stock compensation and can no longer do what it planned to do, which was sell shares to raise this cash.
C.     Facebook employees now have less incentive to stay at the company than they did prior to the IPO, which may make retention more difficult and expensive.
All of these issues could put additional pressure on Facebook's share price. Let's take each in turn….

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