Facebook stock price plunged to
an all-time low on Thursday, which may take hundreds of millions of U.S. dollars away from the budget of the U.S. state of California where the company is based.
The social networking giant's stock has been going down further
after its first earnings report last week failed to cheer up
investors. On Thursday, Facebook stock once dropped to $19.82, nearly half of its initial public offering (IPO) price of $38.
"If the company's stock price remains depressed, hundreds of
millions of income tax dollars assumed in the 2012-13 state budget
plan are at risk," said California's nonpartisan Legislative
Analyst's Office in a briefing on Wednesday.
Back in May when Facebook held its IPO, California state
government expected Facebook stock transactions to generate up to
$1.9 billion from income taxes levied on its employees, which
accounts for about 1 percent of taxes California took in over the
next two years.
California state fiscal officials are now anxiously waiting the
arrival of November, when the so-called blackout period ends and
Facebook employees can exercise stock options or sell their shares.
They had expected Facebook stock price to be around 35 dollars in
November.
California Department of Finance spokesman H.D. Palmer said the
state government will look at revenue projections in November,
including projections on Facebook, to make adjustments to budget,
noting that the entire state budget is based on revenue projections
every year.
During the dot-com boom from 1998 to 2001, California raised the
budget from $58 billion to $78 billion as employees of
technology companies got rich by selling stocks.
After Google's IPO in 2004, the state government increased
spending by about $20 billion in the following two years.
Local newspaper The Sacramento Bee said the "Facebook effect"
highlights the volatility of California's tax system, which heavily
depends on income taxes from wealthy earners who have capital gains
income.
Meanwhile, some analysts said that a series of Facebook stock
lock-up expiration will begin on Aug. 16, and may make more than
five times the number of shares currently trading come on to the
market, which could cause an even bigger drop in Facebook stock
price.
