Re:FB down 8% at opening
by loceng on Monday May 21, 2012 @10:46AM
(#4003066)
Because stock value, after you've gone to the pay window / sold the initial amount to make your investment money back and make money for founders, doesn't really matter to the founders / investors. They know that it's not tied to any real internal metrics. Stocks are a game. Game for the economy when people who don't understand are better high-risk and don't have a clue about internet evolutions / the cycles online. Facebook took advantage of that. Smart? Sure. Abusive? Yup - though they haven't shown much care for what they do to users/consumers anyway.
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This seems like a short-sighted outlook, as it ignores the fact that the stock price matters to employees who have been given shares as incentive, and it also matters for the company's ability to raise money via selling shares again in the future.
Hm. But for an employee with stock (they have a six month lock in selling) there is really no difference in
1) FB making IPO at $30 and rises to §33 second day or
2) FB rakes in $38 and falls to $33 on second day.
Most stock grants to employees are at a particular locked in strike price and they can't sell for 6 months or so anyway.
So their "buy" price as already set and their "sell" price was going to be set by the market anyway.
This is the only time FB can set the price. Any later sales of shares will be market priced.