After watching their investment sink for six months, the big question looming large over Facebook Inc (NASDAQ:FB)’s stock is: How many insiders will dump their shares as the so-called lockup expire?
One such expiration just passed on Monday, though without any buying/ selling, as the markets were closed because of Sandy. By the end of the year, total Facebook Inc (NASDAQ:FB) shares available for trading in the open market, will increase by 73 percent to more than 1.2 billion shares. The shares that missed the market on Monday may find their way today as the market opens. Around 229 million shares were eligible to hit the market on Monday. These stocks include the shares issued to employees before 2011 and some held by earlier insiders.
However, there is no way to find out the employee that cash his/her shares, as only the biggest holders need to file forms with the SEC, but one person sure of not selling soon is CEO Mark Zuckerberg, as in September, he said he wouldn’t cash in any stock for at least a year.
The lock-up expiration presents a valuable opportunity for company’s top executives, to convert paper wealth into extraordinary riches. Last Friday, six executives, including COO Sheryl Sandberg and CFO David Ebersman, saw a major portion of their stock converted into common Class A shares, which allows them to sell their stocks in the open market. Sandberg’s stocks are now worth $396 million after taxes, at a price of $22 a share, while Ebersman’s stock is worth $48.4 million after taxes.
The next lockup expiry date is November 14th, when all Facebook Inc (NASDAQ:FB) employees who joined before 2011 can sell their vested pre-IPO shares, along with other early holders. Another lock-up expiration date this year will be on December 14th. On this date, more than 155.9 million shares are expected to hit the market. Facebook’s early backers like Peter Thiel and Mark Pincus, and co-founder Dustin Moskovitz will get a chance in this expiration to convert their paper wealth into cash. Next year, the expiration date on May 18th will free more than 47.3 million shares held by Mail.ru Group Limited and DST Global Limited.
The biggest tech IPO in history is also famous for other reasons we all are aware of. The stock’s price has witnessed huge downward fluctuations since IPO, but since last week, it has jumped to $23, after the company reported solid earnings and also on the growth prospects talked about by Zuckerberg.