New York: The drastic fall in the share price of Facebook has significantly eroded the personal wealth of its 28-year-old co-founder Mark Zuckerberg by a massive $4.5 billion in just three weeks.
Zuckerberg’s fortune has declined to USD 11 billion from USD 15.5 billion on May 18 when the company went public as investors have dumped the stock amid concerns over growth prospects of the social networking giant, according to the data available with stock exchanges.
Within three weeks of making an entry into the secondary market, the stock value of the company has collapsed by about 29 per cent to $27.10 apiece on Friday from $38 on debut.
Zuckerberg is taking heavy hits to his personal fortune: AP
Zuckerberg’s about 408 million shares were valued at $15.5 billion based on debut price of $38. However, on Friday’s closing price of $27.10 apiece, his wealth has shrunk to $11 billion, a erosion of around $4.5 billion.
However, he has already encashed a total of $4.78 billion by offering his 126 million shares in the public issue at the the price of USD 38 apiece. Zuckerberg, who founded Facebook out of his Harvard University dormitory in 2004, sold shares to use the IPO proceeds to pay taxes.
As Facebook’s stock price has declined, so has its market capitalisation. The company’s current market cap is about USD 58 billion. However, when the company went public, its market value was about $104 billion.
With 901 million users as of March 31, 2012, Facebook was actually planning to sell 337.41 million shares in the initial public offering (IPO) at a price between $28 and $35 per share. At the last moment, the company had increased the size of the public issue by offering an additional 25 per cent stake and also raised stock price to a range of $34 and $38 a share.
Contrary to widespread expectations, Facebook’s stock market debut did not live up to all the hype so far.
Interestingly, shares are now trading in the original price range of $28-$35 price, which the company had set for its IPO.
Even before Facebook made a debut, some market analysts said that the stock was overpriced at $38 apiece and one must wait for now to invest in the firm. Besides, some analysts criticised the decision to boost more shares to the public than originally planned, which lowered demand for the stock.
PTI
