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Moody’s Wall Street-speak for Facebook’s sinking

Tuesday, August 7, 2012

After Facebook shares sink to nearly half their IPO price of $38—closing yesterday at $21.92—the investor service refers to the drop as a “credit negative development.” Translation, in the words of the Babu character from Seinfeld: “very bad; very, very bad.”

Why it matters: As Capitol Alert reports, a low stock price in November could have a negative effect on California’s credit rating, the nation’s second worst after Illinois, because unless something changes, there will be less tax to squeeze from the high-end folks who are reaping Facebook’s whirlwind.

An excerpt:

"California's personal income tax revenue tends to be volatile because it relies heavily on top earners and those with high capital gains income," Moody's wrote in an update. "At 10.3 percent, the state's top rate for personal incomes taxes is one of the highest in the country and the state taxes capital gains at the same rate."

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