The old saying that you don't count your chickens before they hatch must have been forgotten in California.
Facebook Inc. (FB) (FB)’s declining stock price may cost California “hundreds of millions of dollars” in revenue expected from taxes on capital gains, the state’s fiscal analyst said.
The Menlo Park, California-based owner of the world’s largest online social network fell to $20.88 yesterday, its lowest closing price since the company’s $38 initial public offering price on May 17.
The most populous U.S. state’s $91.3 billion budget, signed by Governor Jerry Brown in June, counted on $1.9 billion in income-tax revenue when company insiders such as Chief Executive Officer Mark Zuckerberg exercise options, assuming a per-share price of $35.
“Facebook share prices have fallen far below levels assumed in the state’s revenue projections,” the nonpartisan Legislative Analyst's Office said yesterday in a report. If “the lower share prices persist through November and December, hundreds of millions of dollars of income tax revenue assumed in the state budget plan are at risk.”
California Says Tax Revenue ‘at Risk’ From Facebook Drop