Facebook’s lackluster IPO didn’t just burn Facebook and its investors, it burned California as well.
California Governor Jerry Brown expected his state to pull in $1.9 billion from the Facebook IPO, but revised estimates cut that number by a third to $1.3 billion, reports The Wall Street Journal.
While Facebook launched at $48 a share, the stock dropped off a cliff almost immediately afterwards. That sluggish performance meant lower earnings for the company’s investors, including holders of restricted stock. This, in turn, meant less tax revenue for California.
As the Wall Street Journal points out, IPOs are a big, big deal for California, which gets a lot of its revenue from taxes on capital gains on assets like stocks.
Fortunately for the state, Facebook’s stock has recovered somewhat in recent weeks, which means that there’s not much preventing California from revising its revenue estimates once again to reflect the positive developments.