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Lawsuit Filed Over CEO Zuckerberg's Facebook Stock Dump

Source UPI

Posted on 05 Jun 2012 by Neilson

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FacebookFacebook investors filed suit against Chief Executive Officer Mark Zuckerberg, saying he knew the firm's initial share price was too high, court papers say.
TMZ reported Monday the class-action lawsuit claims Zuckerberg sold a significant share of his Facebook stock, knowing in advance the $38 per share price would not hold up.

The price of Facebook shares has dropped sharply -- off nearly 30 percent, trading at $27.27 per share late Monday -- since its public debut May 18.

This is the second lawsuit filed concerning Facebook and underwriters withholding information before the firm's IPO, which was also marred by technical difficulties at the Nasdaq stock exchange.

The new lawsuit claims underwriters of the IPO -- Morgan Stanley, JPMorgan and Goldman Sachs -- notified large investors the stock was overvalued, but did not disclose this to smaller investors, known as retail investors.

MarketWatch reported Monday market analyst Carlos Kirjner of Bernstein Research set a price target for the company at $25 per share.

"It is difficult to argue for owning stock today," Kirjner wrote in a research note.

Kirjner said the company's revenue capacity through display ad inventory, projected revenue growth and the value of future business opportunities put Facebook in a "material risk," category.

"Investors will question Facebook's ability to achieve our ... (projected) 2013 revenue as near-term (sales) growth decelerates," Kirjner said.

The analyst also said the value of social advertising is uncertain and "will not be resolved in the next 12 months."


Steve Philpott Jun 11 2012 12:15PM Report Abuse
Are you kidding. I'm no investment adviser, but even I knew that the stock price would take a nose dive right away. I would have done exactly the same, and dumped my shares right away. He didn't need any insider information. He would have be an incredible risk taker to have gambled on holding.
Paul Neilson Jun 11 2012 12:09PM Report Abuse
He'll get a slap on the hand as others watch there hard earned money go up in could be worse though. You could have taken Manny Pacquiao and again got taken advantage of by the insiders...
Rick David Jun 5 2012 9:40AM Report Abuse
The insiders allegedly took advantage of the outsiders. Shocking!
Jeff Neilson Jun 5 2012 8:56AM Report Abuse
Face Plant
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