Zuckerberg’s wealth down $4.5 bn as Facebook tumbles on NASDAQ

Jun 10, 2012 |

New York

Tags:

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 USD 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 USD 27.10 apiece on Friday from USD 38 on debut.

Zuckerberg's about 408 million shares were valued at USD 15.5 billion based on debut price of USD 38. However, on Friday's closing price of USD 27.10 apiece, his wealth has shrunk to USD 11 billion, a erosion of around USD 4.5 billion.

However, he has already encashed a total of USD 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 USD 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 USD 28 and USD 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 USD 34 and USD 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 USD 28-USD 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 USD 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.

Post new comment

<form action="/comment/reply/159651" accept-charset="UTF-8" method="post" id="comment-form"> <div><div class="form-item" id="edit-name-wrapper"> <label for="edit-name">Your name: <span class="form-required" title="This field is required.">*</span></label> <input type="text" maxlength="60" name="name" id="edit-name" size="30" value="Reader" class="form-text required" /> </div> <div class="form-item" id="edit-mail-wrapper"> <label for="edit-mail">E-Mail Address: <span class="form-required" title="This field is required.">*</span></label> <input type="text" maxlength="64" name="mail" id="edit-mail" size="30" value="" class="form-text required" /> <div class="description">The content of this field is kept private and will not be shown publicly.</div> </div> <div class="form-item" id="edit-comment-wrapper"> <label for="edit-comment">Comment: <span class="form-required" title="This field is required.">*</span></label> <textarea cols="60" rows="15" name="comment" id="edit-comment" class="form-textarea resizable required"></textarea> </div> <fieldset class=" collapsible collapsed"><legend>Input format</legend><div class="form-item" id="edit-format-1-wrapper"> <label class="option" for="edit-format-1"><input type="radio" id="edit-format-1" name="format" value="1" class="form-radio" /> Filtered HTML</label> <div class="description"><ul class="tips"><li>Web page addresses and e-mail addresses turn into links automatically.</li><li>Allowed HTML tags: <a> <em> <strong> <cite> <code> <ul> <ol> <li> <dl> <dt> <dd></li><li>Lines and paragraphs break automatically.</li></ul></div> </div> <div class="form-item" id="edit-format-2-wrapper"> <label class="option" for="edit-format-2"><input type="radio" id="edit-format-2" name="format" value="2" checked="checked" class="form-radio" /> Full HTML</label> <div class="description"><ul class="tips"><li>Web page addresses and e-mail addresses turn into links automatically.</li><li>Lines and paragraphs break automatically.</li></ul></div> </div> </fieldset> <input type="hidden" name="form_build_id" id="form-4dc71d3a7dd835f1bac139c0c1cee499" value="form-4dc71d3a7dd835f1bac139c0c1cee499" /> <input type="hidden" name="form_id" id="edit-comment-form" value="comment_form" /> <fieldset class="captcha"><legend>CAPTCHA</legend><div class="description">This question is for testing whether you are a human visitor and to prevent automated spam submissions.</div><input type="hidden" name="captcha_sid" id="edit-captcha-sid" value="80514669" /> <input type="hidden" name="captcha_response" id="edit-captcha-response" value="NLPCaptcha" /> <div class="form-item"> <div id="nlpcaptcha_ajax_api_container"><script type="text/javascript"> var NLPOptions = {key:'c4823cf77a2526b0fba265e2af75c1b5'};</script><script type="text/javascript" src="http://call.nlpcaptcha.in/js/captcha.js" ></script></div> </div> </fieldset> <span class="btn-left"><span class="btn-right"><input type="submit" name="op" id="edit-submit" value="Save" class="form-submit" /></span></span> </div></form>