The Facebook investors have filed a lawsuit against CEO of the companysaying that he has sold stock of worth greater than one billion dollars prior to the price fluctuation. They complain that he has taken this step as he knew that the stock has been overvalued and it’s price would drop as the trading starts. Through this move he has limited his own losses in case of further decline in the share prices of Facebook’s stock.
The lawsuit also includes complaints about the disclosure of the information by the company regarding the initial public offering. All these issues have added to the problems of facebook that have emerged after the long awaited IPO. The immensely popular social network aimed to launch its stock for the public with a great buzz, however one of the biggest IPO turned into legal issues as trading of the stock began.
The company’s reputation is going to suffer as a result of these lawsuits. The demand for the stock had increased too high before the IPO but these issues have created doubts in the minds of potential investors. They are confused about the future of the share prices and those who have already bought the shares are concerned about their returns from the investment.
Mark Zuckerberg has been under fire this time as the investors are losing confidence in the stock.They feel that he is safeguarding his own interest and disseminating a misleading image of the company. If he is not holding the stock himself, the other investors would get the signal about an unstable position of the business. They would fear to bear losses in their investments that showed them a different picture earlier.
Businesses keep on facing difficult times and also come out of the tough periods through newer strategies that satisfy their investors but Facebook is being highlighted because the platform itself is very popular. Any news about Facebook spreads very fast and even small issues are brought in the limelight by the media. This lawsuit is also being highlighted which is a negative point for the company. It can lead to decrease in the stock’s demand and therefore recovery of stock price might face problems.
The CEO of the company, Mark Zuckerberg would face criticism and his venture that has been a big hit previously would get negative publicity due to this recent lawsuit. The industry is waiting to see how Zuckerberg defends himself and moves on with his business enterprise.