Facebook’s three-month lockup period (the period after an IPO in which insiders are barred from trading their shares) expired Thursday, and Facebook stock has since plummeted to record lows as insiders scrambled to make bank while they still can. Since its ridiculously hyped, massively overpriced IPO, Facebook has eviscerated nearly half its value, value not lost by those who built the company or even early investors — that $100 billion number was always made up to begin with — but value lost by the public: mutual funds, pension funds, possibly your 401k account.
Our darling IPO. (Google Finance)
Facebook's continued financial downfall completes a trifecta of sorts, what system skeptics ZeroHedge are calling the "triangle of IPO terror" that share a common theme of tons of users, questionable product quality and really crappy business models. As Sam Gustin at Time wrote:
The other two companies in Morgan's Stanley's ignominious trio are Zynga (down an impressively-bad 68% since going public), and Groupon (down a mind-numbingly awful 80% since its IPO late last year.) All three companies are currently the subject of shareholder litigation. In the wake of each company's plunge, Morgan Stanley has faced criticism for not pricing these securities accurately.
Even with the price plummet, the insiders still make out like bandits as someone clearly is today, selling enough to push the stock down as much as 6 percent. And the current share price may still be wildly overpriced: Facebook's P/E ratio is still about 100 or nearly four times Google. The bubble has popped but we're not even close to touching ground yet. Meanwhile, Apple, a company that actually makes stuff, just hit a new all-time high. Maybe it’s time for Zuckerberg to get serious about that Facebook phone.
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