Jeremy Hobson: Now to Facebook, which went public in May with a stock price of $38 a share. This morning, it’s around $21 a share. And today, that price could drop further, when a lockup ends and insiders are able to sell their shares. And it’s not just Facebook that’s looking weaker by the day. Zynga stock is now worth one-third of its initial offering; Groupon’s value is down by half.
Marketplace’s Queen Kim tells us what all this means for the companies behind those share prices.
Queena Kim: Something you hear a lot in Silicon Valley is: We don’t care about the stock, we care about building a great company.
But when your stock is worth one-third its IPO price, don’t you start caring a little?
Paul Oyer: I think it’s always about the stock.
Paul Oyer is a professor at Stanford Business School and he says this is especially true when it comes to keeping employees.
Oyer: When your stock price is doing well, turnover is lower.
Because employees stick around to cash in on their stock options. But when the stock is in the dumps, it can be a great opportunity for competitors to steal employees.
Carolyn Hughes is in charge of talent management at Simply Hired, a job search engine.
Carolyn Hughes: There’s definitely more opportunity to extract talent from struggling organizations.
Hughes says it’s not that employees are just seeking a higher stock price. It’s that when the stock is down dramatically, there can be a lot of chaos.
Hughes: Executives start getting hired and fired; teams start changing.
Employees might find their projects have been cut. Their boss has been fired. And the things they were sticking around for are gone.
I’m Queena Kim for Marketplace.
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