It’s hard to believe that not long ago we were writing about a very different type of management concern for Mark Zuckerberg. A few months before the IPO, I suggested Zuckerberg’s internal challenges would be “keeping employees focused on great products, rather than high stock prices.”
What a difference six months make. On Thursday, the social network’s stock reached a new low, falling 6.3 percent to $19.87, nearly half of the company’s $38 IPO price. The tumble came amid the first “lockup expiration,” a milestone at which early investors became able to unload their shares. Some 271 million Facebook shares became eligible for sale on Thursday—although the owners can, of course, choose to keep their shares (and many did). There are more lockup expirations coming in November and May.
Thursday’s fall is just the latest hit for Facebook’s stock. In late July, the company reported a loss in its first earnings release as a public company as costs increased. At one point, the stock had fallen 14 percent on the news, the New York Times reported. The fallout from a troubled IPO process is still a factor at the company, too.
The news can’t feel good to Facebook employees who, just a few months ago, must have been sitting on top of the world at the prospect of how high their shares might go. They still could, of course, but reminding employees of that fact while the stock is hovering down around $20 is tricky. Doing so would either have them questioning leaders if the stock sinks lower, or having the unintended effect of getting people even more focused on stock performance.
Zuckerberg and Chief Operating Officer Sheryl Sandberg will have to walk a fine line of keeping staffers focused on Facebook’s products, rather than its stock price, while still acknowledging any anxiety some employees might be feeling. In a newly public company, no matter how much managers try to keep everyone’s mind off the stock price by reminding them about the day-to-day whims of the market, the promise of all those stock options is hard for anyone to completely ignore.
Some have even begun calling for Zuckerberg to step aside, saying that while he may be a visionary, that doesn’t necessarily make him a great chief executive. A resignation seems unlikely—not only because he has defenders, but because his controlling interest in Facebook should keep him making decisions for a long time. The current challenge for Zuckerberg isn’t keeping his job, but keeping his people focused on long-term goals while still meeting some of Wall Street’s short-term demands.
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