Facebook employees scale down dreams
8/22/2012SAN FRANCISCO -- Facebook Inc. is in a world of hurt on Wall Street but its employees are also feeling the sting of the stock's sharp sell-off.
For many staff members, the precipitous drop means their Facebook stock is not going to yield the returns they hoped, at least not right away. They have had to defer or downsize their dreams of buying a home or a new car. These are the rank-and-file workers, not the relative handful who got in on the ground floor and own enough stock to make them rich … or richer.
"People made life plans and calculations," said a Silicon Valley chief executive who spoke on the condition of anonymity to preserve his relationships inside Facebook. "This is very, very painful."
And the noisy public criticism of Facebook has become nearly impossible to shrug off, hurting employee morale.
"These are people who like to win. Now there's this external measure of winning, which is difficult to ignore," said one ex-Facebook employee who also requested anonymity to preserve relationships at the company. "It doesn't feel good."
Facebook, the world's largest social network with nearly 1 billion users, became the only U.S. company to debut with a market value of more than $100 billion. But it has been all downhill from there. Facebook's shares closed yesterday at $19.16.
They've been dragged down by worries that the company's popularity has stalled and that it has not figured out how to sell advertising on mobile devices as users gravitate to them.
Shares also were walloped last week with the lifting of restrictions on insiders selling stock. It was the first time since the initial public offering that investors -- although not employees -- could unload shares. Companies that go public typically require insiders to hold on to their stock to keep the market from being flooded with shares.
Starting Thursday, a combined 271 million Facebook shares were eligible to be sold. More than 1.4 billion more shares held by early investors and Facebook employees will be freed up for trading by year's end. Many employees will be able to sell shares beginning in October.
That has spooked investors. Other Internet companies that have gone public over the last year have also gotten hammered when employees could sell their shares.