Facebook Inc (NASDAQ:FB) shareholders are free to sell their holdings after the lock-up, which is intended to prevent the overflow of stocks in the market for a certain period of time, expired today. The total number of shares freed from restrictions, and will be available for trading is 271.1 million.
Some of the largest investors that might sell their stakes in the company include Goldman Sachs Group Inc. (NYSE:GS), Accel Partners, DST Global Partners, Elevation Partners, Microsoft Corporation (NASDAQ:MSFT), and venture capitalist Peter Thiel.
Mark Harding, analyst at JMP Securities LLC, suggested it is best for shareholders to hold on to their Facebook holdings. According to him, selling the stock immediately after the restriction lift is unfavorable for shareholders. He said, “It certainly wouldn’t behoove and wouldn’t be in the shareholders’ best interest to dump the shares on the market all at once. I would assume that all of the investors that hold the 270 million-odd shares are probably rational, and probably realize that flooding the market with that kind of supply over such a short amount of time wouldn’t help their position.”
S&P Capital IQ Analyst Scott Kessler raised his rating on Facebook Stock from hold to buy, shrugging off concerns that investors would dump their holdings as soon as possible, and a large volume of shares available in the market will result to a significant price decline. Kessler thinks otherwise. According to him, “We do not expect early employees and investors will be aggressive sellers of FB shares at current levels, after the stock has fallen more than 50% from the intra-day high set on May 18, the IPO date.”
A report from Bloomberg last week indicated that Microsoft Corporation (NASDAQ:MSFT) plans to hold its shares in Facebook Inc (NASDAQ:FB). The company considers its stake in the company a strategic investment to achieve its objective of competing with Google Inc (NASDAQ:GOOG), according to a source who has knowledge regarding the plans of the software giant. Based on regulatory filings, Microsoft owns 26.2 million FB shares.
On the other hand, Peter Thiel is expected to sell some of his holdings in the social network giant. According to reports, the hedge fund manager submitted a regulatory filing, converting more than 9 million FB shares from Class B to Class A.
Erik Gordon, professor at Ross School of Business at the University of Michigan, said Class A shares are easier to trade. According to him, Thiel’s decision to change the status of his stocks in a position to be able sell quickly is “not a vote of confidence.”
Since its IPO, Facebook Inc (NASDAQ:FB)’s stock plummeted by 46 percent. Its pre-market stock price on Thursday is $21.20 per share.
And as usual the sell side analysts were wrong. Facebook Inc shares are trading at $19.88 a share, down 6.32% at the time of this writing.