Is This a Major Red Flag for Facebook?
Investors braced for additional employee lockups on Facebook (NASDAQ:FB) shares to expire on Wednesday. Many were concerned that an additional 800 million shares floating around would hurt the already wounded stock price. Shares dipped back below $20 per share while investors remained dubious about the lockup and monetization efforts, but when the day came, shares shot up.
Raising some concerns was the amount of short interest in the stock, which increased to 18.6 percent of float in October. However, the Wall Street Journal reports that short interest has dropped by nearly 40 percent so far this month.
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While employees dumping shares would definitely be a red flag for Facebook, the company should have more on its mind than its stock price. At least, so says American business magnate, Shark Tank investor, and owner of the Dallas Mavericks Mark Cuban, who looks ready to become an outspoken critic of the social network.
Cuban made public a screen grab from the Dallas Mavericks Facebook page that asked him to spend $3,000 to reach 1 million of his own fans with a post — not an advertisement, a post targeted at only those people who already like his page.
Cuban points out that owners of pages with many “Likes” don’t reach 100 percent of their audience with every post. The theory is to try and keep news feeds clean and relevant by not flooding them with every update posted by every page a user likes. The news feed is Facebook’s prime time, and if a company wants to get its content to stick in the news feed, it has to pay for sponsored posts.