In contrast to the Google IPO in which the stock skyrocketed on the first day and really took off after that. Google may have been able to extract quite a bit from their IPO than they did.
Among other things, this means that employee options would still be above water. Rather more motivating than underwater options after years of death-march hours.
I never checked my FB options package. Largely on account of not receiving one.
No, the strike likely isn't 38. But downward valuation on stocks or options decreases their value.
If options were granted (and apparently this isn't the case at FB, see the RSU comment -- restricted stock units), then there would be _some_ strike value. Often shares are granted at some price as well (though it's frequently at some nominal "par" value, typical $0.01).
With options, it's possible for employees to end up with no value at all. In some cases, companies have re-issued "above-water" grants, though this has been frowned on in recent years.
With stock, again, you have the situation of sitting on, say, a few hundred or thousand shares, and watching your paper worth drop from $40k to $20k to .... Now, according to Zuck, that's not cool money, but to your typical Valley engineer, it's still plenty green, and hurts to see it wash away.
Last minute change to $38+ was suicide.
Remember market cap = total shares * price. :)
More realistically, Facebook should have sold less shares, which would have kept the price at that target. But I guess it couldn't sell less: they had a bucketload of people who wanted to sell, and all the biggest potential buyers had already bought... Lesson learned: don't get talked into secondary market abuse...
Sure I get the supply and demand thing you're trying to articulate, but the reality is that I as an investor am concerned that FB is overvalued at 100B marketcap, whether the shares are sold at $1 or $10000.
http://www.nasdaq.com/symbol/gknt/interactive-chart , then click the "Max" button down the bottom ...
Google priced their shares based on an auction, I'd say it was priced right. It was also much smaller because it wasn't a bunch of insiders trying to dump their shares at an inflated value.
Google sold 19.6M shares, 14.1M of them were from corporate. There were 271M shares in total, so only a very small amount of the company was transferred. In contrast for FB, there are 2.14B total shares and the IPO was for 421.2M of them, a much larger percentage of the company. In addition, insiders made up 241M of those shares sold, which is actually the majority of the IPO.