California Watches Projected Tax Revenues From Facebook IPO Sink With Stock Price

Do you remember that pot of taxation-revenue gold the state of California was expecting under the rainbow following Facebook’s initial public offering? Hold that thought.

The state’s nonpartisan Legislative Analyst’s Office based its earlier projections on a stock price for Facebook of $42 per share, which was even more optimistic than the state Department of Finance’s projection of $35 apiece, according to a report in The Sacramento Bee.

The social network’s shares have sputtered, however, trading at around $20.27 per share at the time of this post after going public at $38 each.

In May, the California Legislative Analyst’s Office predicted that if Facebook shares hit $45 apiece six months after the IPO, and kept rising, the combination of capital-gains taxes from investors and taxes on stock awards and options for employees of the Menlo Park-based social network would bring in $2.1 billion in taxes over the next 13 months.

It also predicted at the time:

  • $650 million in Facebook-related revenue for California in the 2014 fiscal year.
  • $150 million related to the IPO in fiscal-year 2015.
  • Tens of millions of dollars in the next two fiscal years.

The Legislative Analyst’s Office said Wednesday, as reported by The Sacramento Bee:

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.

And Jason Sisney, who tracks revenues for the organization, told the newspaper:

Given where the price is and that it’s been weak recently, it’s one of the risks that’s out there. I mean, I get questions from Berlin and Amsterdam about it.

Department of Finance Spokesman H.D. Palmer attempted to downplay the situation, telling the Bee:

The issue is not where the share price is now — it’s where it’s going relative to November.

Readers: Do you think the state of California counted its chickens before they were hatched?

Image courtesy of Shutterstock.

Related Stories
Mediabistro Course

Facebook Marketing

Facebook MarketingStarting Janaury 13, work with the group marketing manager of social media at Microsoft/BingAds to build a fan base and grow your business on Facebook! In this course, Geoffrey Colon will teach you how to set up and enhance your company page, understand best practices and measuring your success, execute a monthly content strategy, and incorporate Facebook into your overall marketing efforts. Register now!