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Facebook CEO Mark Zuckerberg sees shares tumble as lawsuits kick in

Metro.co.uk
Wednesday, 23 May 2012

*Facebook's botched stock market listing is under fresh assault as angry shareholders sue the company and its boss Mark Zuckerberg.*

Facebook CEO Mark Zuckerberg's company is in hot water as the once-promising stock market flotation flounders (Picture: Getty)

The social network site and its underwriters, including Morgan Stanley, were accused of hiding the company’s faltering growth from investors.Only a select group of insiders were aware that the company was forecast to earn tens of millions of pounds less than had been publicly stated.It meant ordinary investors, unaware how the company’s performance was stalling, were potentially paying too much for shares at the flotation price of $38.City analyst David Buik said last night it had been ‘simply greedy’ to offer shares at so high a float price. ‘Facebook was never worth $38 a share,’ he added.Facebook finally floated on New York’s Nasdaq exchange last Friday but the launch was marred by technical glitches.Shares have crashed by nearly 20 per cent since and today were trading in New York at $32.

Growth has stuttered because Facebook users increasingly access the site with smartphones, which generates less advertising revenue.The lawsuit claims the defendants concealed ‘a severe and pronounced reduction’ in revenue growth forecasts for Facebook.One Morgan Stanley analyst, Scott Devitt, cut his forecast for Facebook’s revenue this year to $4.85billion from $5billion but it is unclear if his view was widely circulated.Some shares sold before Friday’s flotation came from Mr Zuckerberg, who offloaded more than $1.1billion of stock to ensure he could meet tax demands, and early investors, such as U2 star Bono.Facebook said the ‘lawsuit is without merit and we will defend ourselves vigorously’ while Morgan Stanley had no comment.
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Source: IBTimes.com - on May 21, 2012

News video: Facebook Shares Fall Sharply in Morning Trade Following Shaky IPO

Facebook Shares Fall Sharply in Morning Trade Following Shaky IPO

Facebook shares sank on Monday (May 21) in the first day of trading without the full support of the company's underwriters, leaving some investors down 25 percent from where they were Friday (May 18) afternoon.

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