Zuckerberg to Come Out of 'Shell' at TechCrunch
Facebook investors will find out Tuesday whether CEO Mark Zuckerbergcan finally shift attention to the company's future from its botched IPO.
The hoodie-wearing CEO is scheduled to speakat the TechCrunch conference in San Francisco. His comments will be a rare break in the dearth of public information since the social-network giant's initial public offeringof stock in May.
"He's retreated into his shell," says Francis Gaskins of IPOdesktop.com. "He has to be out there and be visible."
It's not just the scarcity of information since the IPO making investors eager to hear Zuckerberg's comments. There also has been a lot of news weighing hard on the stock. The shares, which went public at $38, closed at $18.81 Monday for a loss of more than 50% from the IPO. The negative news has included:
- Heavy insider selling. Ever since the first "lockup" was released, meaning that insiders and early investors were allowed to sell, they've been doing exactly that. For instance, on Friday, Securities and Exchange Commissionfilings showed that Facebook co-founder Dustin Moskovitzsold another 5.7 million shares, at between $18.53 and $19 a share. He's been selling regularly since August 17 and has cumulatively raised $143 million, the Associated Press reported. That was only a small slice of his holdings, because Moskovitz still owns 126 million shares.
- Lingering controversy over IPO. Outraged traders and big investors hoping for more compensation from losses suffered in the IPO are getting no relief. Nasdaq , the exchange that has been accused of fumbling Facebook's IPO, said Monday that it has no plans to change its proposed $62 million fund to compensate traders for losses on the IPO, Reuters says. Large brokerages that facilitated early trading in the IPO have been vocally against Nasdaq's planned settlement, saying it's inadequate. Nasdaq said it plans to defend its decision if challenged. The SEC is expected to weigh in on the plan by the end of the year.
- Discouraging fundamentals and lack of communication. Investors are increasingly realizing that Facebook's ability to increase its already-massive customer base is limited, says Jason Malak at CBIZ Valuation Group. That means the company's attraction to investors hinges on its ability to charge current users more to access the service. Investors now assume the company "doesn't have a clear path" to boost revenue, and that means at $18 a share — below where the stock is right now— "is too rich," he says.
Meanwhile, Facebook rivals aren't letting up. Many investors who thought Facebook would steal advertising dollars from Google are reconsidering, says Sameet Sinha of B. Riley. "Investors are asking: 'Would I rather own Google or Facebook?' " he says.