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Major Facebook investor dumps nearly 2 million shares as analysts await LinkedIn Q2 report
Facebook shares fell another 6.2% to a record low on Wednesday. This makes for the third straight day of declines after the biggest social-networking service reported second-quarter results that showed slowing growth and set out no company forecasts for the current quarter or the year.
Shares closed for the day at $20.88, the lowest closing price since Facebook held an initial public offering on May 17 and just 4 cents above the all-time-low it experienced earlier in the day.
Facebook shares have had a rough run the short, few weeks that it has traded on the NASDAQ, only hitting an all-time high of $45.
This stock slippage also comes one day before LinkedIn is set to release its quarterly earnings report.
Bernstein Research’s Carlos Kirjner today raised his rating on the company stock to "market perform" from "underperform," while cutting the price target to $23 from $25, writing that the existing display ad business is worth $19, but that there’s $4 of potential upside.
Fidelity Investments, an early and major purchaser of Facebook stock, also let go of 1.9 million shares during June alone, when the social network’s value on the public market fell toward the $25 mark.
The Wall Street Journal reported that Fidelity funds originally bought $200 million in Facebook stock in spring 2011.
Before May, it was not uncommon to see Facebook shares on the secondary market trading in the mid-forties on sites such as SharesPost and SecondMarket, but any activity in that area on the primary markets has lasted no more than a few hours at a time.
Fidelity is the third-largest mutual fund company in the United States. It’s privately held and counts more than 20 million individual and institutional investors among its clientele.
It appears that the catalyst of this plummeting behavior was Facebook reporting that the sales growth of the company slowed from 45% in the first quarter, down to 32% in Q2.
This may not be the end of the shares traveling downward this quarter since Facebook's lock-up period will expire in different tiers over the next 4-12 weeks.
Facebook warned, back in May, that sales growth wasn’t keeping pace with user expansion as more people access the service with mobile phones and CFO David Ebersman even clarified on the quarterly earnings call that the number of ads delivered in the U.S. decreased 2% last quarter even as the number of daily users gained 10%.
Analysts and investors will be watching to see just how deeply Facebook share will be impacted by the LinkedIn quarterly earnings, especially since Facebook has felt several shutters in its pricing thanks to Zynga under-performances.
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