Home Technology Facebook’s Stock Price Is Still Sensitive To Lock-up Expirations

Facebook’s Stock Price Is Still Sensitive To Lock-up Expirations

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Life is hard for many, but it seems to be the hardest for Facebook Inc (NASDAQ:FB) these days. The social media’s uncontested king cannot get a break from bad news, it seems to follow it everywhere. The lock-up period on Facebook Inc (NASDAQ:FB) stock expired on August 16, where-after a new sleuth of itches has plagued the company. About 271.1 million shares were freed from the lockup restrictions, and this led to heavy trading in the proceeding days. The stock touched its its lowest level of $17.73 on Sep 4th. Shares are currently trading at $18.81.

Facebook's Stock Price Is Still Sensitive To Lock-up Expirations

Peter Thiel, a member of Facebook’s board of directors and founder of Calrium Capital and Founders Fund, sold off 20 million shares at $400 million. Pter Thiel’s share in Facebook Inc (NASDAQ:FB) is now down to nearly zero. The move was viewed as a significant no vote of confidence in Facebook’s valuation.

Dustin Moskovitz, co-founder and former roommate of Mark Zuckerberg, has also been on a selling spree in the past weeks. He started off by selling 450K shares on Aug 17, 20, and 21. To date, he has sold off some 7.5 million shares in total at a value of $214.5 million. Moskovitz still owns more than 125 million shares and he did not sell any on May 18th, at the time of Facebook’s IPO. According to SEC restrictions, Moskovitz can sell about 1.3 million more shares, which he converted from Class B to Class A.

Among those who are sticking to their investment in Facebook are, Zuckerberg and Microsoft Corporation (NASDAQ:MSFT). A few hundred million for Microsoft is no big deal anyway, besides the Windows manufacturer sees Facebook Inc (NASDAQ:FB) as a long term investment and an entity that can compete against Microsoft’s other arch nemesis, Google Inc (NASDAQ:GOOG).

Facebook Inc (NASDAQ:FB)’s stock price is extremely volatile due to huge chunks of stocks being sold. The bad performance is undeterred by opinions of analysts like, Jefferies and PiperJaffray who rate the stock as a good long term investment. Ofcourse, sell-side analysts are notorious for being perma-buls.

Some think that the entire reason behind Facebook’s stock plummet, is the fear of lock-up expiration dates. More lockups are expiring in coming months, with one ending on October 29 that will put about 234 million shares on the market, after which Facebook employees will be able to trade. Another expires on November 14, with restrictions lifting from 777 million shares and on December 14 with 156 million shares made available for trading.

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