Facebook and the California Budget Deficit

 Facebook shares are down another ~4% today after a similar drop yesterday.  They're down 50% from a few weeks ago.

But does the price of Facebook's shares matter? And if so, to whom?

For that matter, do share prices affect government finances?

Well, yes, in the case of Facebook, these things do matter. In fact, they matter a great deal to California politicians, legislators, taxpayers, public employees and citizens.

As Facebook sinks, so do California's budget assumptions puts it this way:

"With Facebook shares trading at  all-time lows, investors in the busted IPO are gnashing their teeth.

But they’re not the only ones.

California state officials had been counting on a big boost to state revenues from the social networking company FB -3.83% .

California Governor Jerry Brown’s office put the number as high as $1.9 billion, assuming that Facebook shares are trading around $35 later this year when restricted stock unit lockups end.

Now however, with Facebook barely above $20, those assumptions are very much in doubt.

And as the Legislative Analyst’s Office told 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.”

Summing Up

I guess the share price does matter, and a lot---even to millions of people who have no idea what the share price is.

Thanks. Bob.