Facebook Stock Hits A New Low, Now Down More Than 50% Since IPO
Facebook's stock just hit a new low and has now lost more than 50% of its value since the social network's IPO in May. This new record low comes after analyst firm BMO Capital Markets cut its price estimate on the company's shares from $25 to $15 today.
Context & Ripple Effects
The slide has been steady since the offering stumbled out of the gate: shares were already below $29 within two weeks of pricing, erasing roughly $35 billion in value by late May. The August leg of the descent had a mechanical trigger — the first insider lockup expiration on August 16 flooded the market with new supply just as sell-side support evaporated.
Today's new low is the first move driven by fundamentals rather than mechanics: BMO Capital Markets cutting its target from $25 to $15 implies the bank sees the ad business supporting barely a fraction of the $38 IPO price. The pickup across eight outlets — Bloomberg, WSJ, Guardian and others running the same story the same day — shows how closely the market is treating this as a referendum on the whole 2012 mega-IPO class.
First-order effects
- Facebook employees holding vested RSUs are now deeply underwater, turning the retention math Business Insider laid out for staff into an active flight risk rather than a theoretical one.
- BMO's $15 target gives institutions still holding from the IPO a sell-side anchor below the current price, inviting further markdowns rather than dip-buying.
Second-order effects
- Facebook is responding with monetization and trust fixes aimed squarely at advertiser confidence: the newly announced targeting that lets brands reach customers via collected email addresses and phone numbers, alongside automated purges of bogus 'zombie' Likes, both address exactly the doubts driving the multiple down.
- The tension Wired flagged in July — selling users out for Wall Street — sharpens: with the stock at half its debut price, every incremental revenue product pushes harder against user-experience and privacy boundaries.
Third-order effects
- With more insider lockups scheduled to release through late 2012, supply overhang keeps capping any recovery regardless of operating performance, pressuring Facebook toward results-driven catalysts like mobile ad traction or the Gehry-designed engineering campus it unveiled last week.
- If the pattern holds, the deal becomes the cautionary template for consumer-internet IPOs: bankers' pricing detached from ad-market fundamentals invites a long public-markets repricing, raising the bar for governance and valuation disclosure at the next wave of listings.
The trend: Consumer internet companies are being repriced from hype-era IPO multiples toward auditable advertising economics, with insider-supply events dictating the pace of the correction.