Stock options were a key tool in hiring practices at Facebook. The morale of those employees will be taking a nosedive along with the stock price. At the very least this makes it harder for Facebook to hire new employees based on stock option grants because new hires will discount the value of the stock options until the price stabilizes.

From the article:

"The danger, Ritholtz said, is that the drooping stock price could tag the company itself with a "stink of failure" that could make advertisers less willing to use Facebook."

This is such crap.

I don't decide where to spend my advertising dollars based on the company's stock price. I do a trial run and see if the CTR and conversions come under my customer lifetime value. If it does, then I pump more money into the ads. No where does stock value come into the equation.

I couldn't care less if the company is dieing - as long as I'm gaining more money (in terms of LTV of new customers) for less money than I'm spending on ads, it's a win to my business.

If the company goes belly up...well I just move my advertising budget somewhere else.

He didn't completely sell out. He still has the controlling stake in the company.

The CEO supposed to be making money for the shareholders, not for himself. Maybe someone forgot to tell him, but the level of success of a public company is reflected in the share price.

There is no requirement to maximize short-term stock prices, though. He may genuinely believe that his strategy is long-term the correct one, in which case he'd be correct to pursue it. After all, the stock price has widely swung in its evaluation of Facebook's value in a space of mere months, first pricing FB very high and then pricing it much lower, with little intervening change of fundamentals, so its credibility as an indicator of company performance is not strong.

Indeed. Bezos is famous for destroying short term profits because he likes to reinvest in Amazon (growing logistics, distribution, etc) which has so far profited investors handsomely in the long term.

But the major difference between Bezos' strategy with Amazon and Zuckerberg's apparent strategy with Facebook is that Amazon was absolutely up front that they're willing to sacrifice short term profits for long term stability.

Amazon's initial shareholder letters were basically "Yes, we know we're not turning a profit right now, but that's because we believe in our long term plan". They also detailed what they were doing to make sure that their short-term spending was going to result in long-term returns. Amazon's letters and SEC filings were focused almost completely on this message: That we're spending money now to make a LOT more money in the future.

Facebook, perhaps due to the competitive space that they're in, really haven't done anything like that. Their filings have more of a "Deer in the Headlights" feeling than anything else, with mobile revenue being basically 0, and not adequately explaining the massive expense increases for Q2 2012. Those are red flags for investors. It's a completely different message from Amazon's.

Is this true for an IPO as well? How can the CEO work for the shareholders before they buy the shares? Isn't the point of IPOs to get the most money for the company?

No. It was quite clear in the IPO that Zack is in control and can do what he likes. Dual share classes and full control. He has no obligation to do what is in the interest of other shareholders.