According to a report from PiperJaffray, Facebook Inc (NASDAQ:FB) stock may be one best to have in one’s portfolio of large cap tech firms. The networking giant shares hold great potential when compared to other companies in the same industry. In the near future there are two events that could have a significant impact on the prices of the stock, both positive and negative: the positive one being a potential introduction of a “Want” button, and negative one is the lock-up expiration in November. As per the historical trends, investors may abandon the Facebook Inc (NASDAQ:FB) shares as they move nearer to the biggest lock-up expiration in November, but trends also predict that lock-up expiration won’t have much impact on the stock.
The negative sentiments after the second quarter earnings of the social networker have almost peaked, as per the report. The range at which Facebook Inc (NASDAQ:FB) shares are traded currently cannot be termed as bottom point, but in the coming twelve months shares could experience an upward movement.
One of the main reasons for the stock’s current plight, is the spread of too much negative news about the company by the media, after the below average performance of its IPO. So it is very important for Facebook Inc (NASDAQ:FB) to get the media on its side. For this, it could provide media with evidence that it is working on a “Want” button, and will launch it soon. It could use the upcoming developer’s conference to make such an announcement. Also, to get media back, company should provide “positive indications of the company’s mobile sponsored stories are likely to continue, which could imply accelerating run-rates for the mobile business, following the $180 million run-rate as of June.”
As the biggest lock up is coming near, there is possibility that investors could exit the shares but that exit might not have much impact on the share prices. The report analyzes 16 US Tech/Internet IPOs over the last two years, to examine the typical stock movement before and after the 180 day lock-up period. The report found that, the shares of the concerned company declined on an average by 6 percent before 30 days to lockup expiration. While, 30 days after the expiration of the 180-day lockup, shares of the underlying companies declined an average by 1 percent.
If historical trends are to be believed, post expiration shares may not decline with the same intensity as they declined in pre lockup period.
“History suggests investors may continue to exit Facebook Inc (NASDAQ:FB) going into lockup (biggest is Nov 15th), but history also shows it is unlikely shares will be impacted following the actual lockup expiration.”
