A term that is a lot in the news these days is “lock-up expiration,” particularly with reference to Facebook Inc (NASDAQ:FB), and also to Zynga Inc (NASDAQ:ZNGA).
Lock-up refers to a statutory period of time after an IPO, in which shares held by insiders cannot be offloaded in the market. This is done to ensure that the market is not swamped by too much of a single stock, and helps afford some protection to retail investors, at least in the initial period of the listing.
Tiger Legatus Master Fund was up 0.1% net for the second quarter, compared to the MSCI World Index's 7.9% return and the S&P 500's 8.5% gain. For the first half of the year, Tiger Legatus is up 9%, while the MSCI World Index has gained 13.3%, and the S&P has returned 15.3%. Q2 2021 hedge Read More
Both Zynga Inc (NASDAQ:ZNGA) and Facebook Inc (NASDAQ:FB) investors have seen their fortunes mauled by the bears in these stocks. For Facebook, a report in the WSJ states that the number of shares on loan to short sellers has risen from 63 million a month ago, to 93 million now.
Apart from fundamental factors, such as earnings and guidance, a major factor is the stock overhang that could deluge trading once locked-up stocks are released from expiration. This factor is important both for Zynga Inc (NASDAQ:ZNGA) and Facebook Inc (NASDAQ:FB).
Hence it would not be out of place to take a close look at the lock-up expiration schedules for these two companies (Source Stern Agee).
For Zynga Inc (NASDAQ:ZNGA), major expiration dates in April, May, and July have already expired, releasing 490 million shares from lock-up. Another 150 million shares become eligible for release today (Aug 16, 2012), and 30 million shares from certain options that vested on Aug 15, 2012.
For Facebook Inc (NASDAQ:FB), 271 million shares release today. Another 243 million release between Oct 15 and November 13 – these are from employees and directors other than Zuckerberg. A big chunk, 1323 million shares releases on November 14 from VCs and insiders, including Zuckerberg. 149 million shares can hit on December 14 from VCs. The last lot of 47 million shares is scheduled for release on May 5, 2013, and come from Mail.ru Group and DST Global Limited.
It appears from the above that the worst is mostly over for Zynga Inc (NASDAQ:ZNGA), but for Facebook Inc (NASDAQ:FB), a lot of supply is still on the anvil, and could have a bearing on the share price, as discussed here in Valuewalk.