GSV Capital CEO: Facebook Only 4% of Overall Holdings

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A Silicon Valley based investment firm, GSV Capital
GSVC
, which is well known for holding Facebook's
FB
pre-IPO shares is down significantly since the social media giant went public last Friday. Traders were using GSV Capital's shares as a way to invest in Facebook before its IPO and betting on that a big pop in Facebook's share price would also push GSV Capital's shares higher. Due to Facebook's disappointing IPO performance, GSV Capital's share price has fallen approximately 25% from last Thursday's closing price to the $12 level. The stock is trading below its 50-day and 200-day moving averages and its relative strength index of 29 suggests that the stock might be oversold. Benzinga contacted GSV Capital's Chairman, President, and CEO, Michael Moe, to discuss Facebook's infamous IPO and its potential impact on the IPO markets in the future. Michael Moe said that Facebook's IPO was naturally a disappointment. He noted that there had been active trading in the second market for a long time, which had led to a price discovery. Active trading in the second market had also made it possible for institutions to acquire significant stakes in the company before its IPO. Also, the mistakes made by Nasdaq
NDAQ
did not help the trading on the IPO day. In addition, Moe noted that the supply of Facebook shares was significantly higher than in the prior social media IPOs. For example, when LinkedIn
LNKD
went public last May, its IPO float was approximately 150 times smaller than Facebook's. These factors naturally had a negative impact on the share price on the IPO day. However, Moe noted that Facebook makes up only 4% of GSV Capital's overall holdings, hence, its impact is not as significant as some might believe. Another social media giant, Twitter, is actually the company's single largest holding. GSVC currently holds nearly $30 million worth of Twitter shares and is looking to accumulate more shares, if the price is right. A file hosting service, Dropbox, is another private company that makes up a meaningful share of GSV Capital's overall holdings. According to Moe, the average price at which GSVC acquired Facebook shares was less than $30. Hence, the company is still in the money despite the decline in Facebook's share price. He has a bullish long-term view on the company and cites Facebook as “the future communication platform.” When asked about the future impacts of Facebook's disappointing IPO trading, Moe said that it most likely will not change the current situation, in which private companies stay private longer and retail investors are hesitant to participate in the markets. Moe noted that had the Facebook IPO been more successful, the situation could have changed to better and made the companies and investors more eager to participate in the IPO markets. Overall, the depressed share price of GSV Capital could provide a buying opportunity, especially if the excitement over social media/Internet stocks remains high. Twitter is likely to be the next company held by GSV Capital to go public, but other interesting names include Chegg and TrueCar. You can follow me on Twitter
@TuomoKallio.Updated on May 24 at 11:20 AM
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Posted In: Long IdeasMovers & ShakersStartupsHotTechTrading IdeasGeneralFacebookGSV CapitalMichael Moetwitter
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