California Bet 2% Of Its Budget On Facebook's Stock Price Remaining High
from the oops dept
California, a state that has had budget problems for years, apparently bet approximately 2% of its budget on the idea that Facebook’s stock would remain at or above $35 and that a bunch of insiders would sell, racking up tax revenue for the state. However, with the stock continuing to drop, the state’s fiscal analyst is now warning that perhaps over a billion dollars in expected tax revenue may be at risk. The state’s budget is $91.3 billion, and that was built on the assumption that a successful Facebook IPO and insider sales (at an average price of $35) would bring in $1.9 billion. Of course, the stock has been in decline since its IPO, dropping below $20, hence the concern.
What I love about the linked article, however, is that the Bloomberg reporter sought to get a comment from Facebook over this (the company declined). What did he think Facebook would have to say? That it would try harder? That it felt bad that the state overestimated its stock price just about as much as the company itself did? I would imagine that budget overruns by the state due to Facebook’s falling stock are pretty far down the list of priorities for Mark Zuckerberg these days…