MYSTERY: Facebook Thought Its Stock Value Dropped In February

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We’ve uncovered something very odd about Facebook’s pre-IPO stock price.

On February 23, 2012, Facebook valued its class B shares at $29.30, according to a filing with the California Department of Corporations we just reviewed. Research analyst Justin Byers of VC Experts provided us with a copy of the document (PDF).

That price is a buck and a half below the price it set for itself just a month earlier.

According to its latest S-1, Facebook valued its shares at $30.89 on January 31, 2012.

It’s not a staggering drop, but it is interesting.

It could reflect Facebook’s view of market conditions at the time; updates to its cash-flow projections; the price paid for Facebook shares in recent transactions in secondary markets; or a combination of all three.

Under IRS Code Section 409a, or the 409 rule, private companies must set a fair-market value for their shares when they’re issued as compensation—like when employees exercise stock options. Facebook’s accountants consider the above mentioned factors, but change the weighting of the factors at their discretion.

A Facebook spokesperson declined to comment.

That leaves us with two questions:

  • Why hasn’t Facebook updated its SEC filings to reflect this more recent price?
  • Who’s the lucky owner of $293 million—or whatever—in Facebook stock?

California Department of Corporations Filing For Sale Of Facebook Stock