Facebook shares have dropped nearly 50% since the highly anticipated IPO. On Thursday, there is the chance of falling even further as the “lock-up” on shares from insider investors expires. As of noon on Thursday, volume on Facebook stock sales is about 4x as high as normal, and it’s not clear whether this is insiders dumping shares, or simply anticipation of them doing so.
The struggle for Facebook has been finding a way to monetize their massive user base. While Facebook has an advertising system, advertisers are seeing notoriously poor results, and because of this Facebook is struggling to retain advertisers, which form the main source of growth opportunity.
Solving this problem will make or break Facebook going forward. It is not clear how far Facebook is willing to go as increased advertising visibility may alienate its userbase; where all of Facebook’s current value is located.