Social network’s shares to face lockup period expirations for another 15 months
Facebook shares dropped to their lowest level ever as the first of six lockup periods expired, allowing some early investors to sell their shares for the first time since the May IPO.
NASDAQ-listed shares of the social network plunged 6.3 percent, or $1.33, to $19.87 following the end of the lockup period on Thursday.
Some 157 mn shares changed hands in the day, three times the volume of trading the previous day. The shares had dropped to an all-time low of $19.69 earlier in the day and gained before closing.
The drop was the biggest post lockup period decline of any stock since January of 2011, when the lockup period expired on shares of social game maker Zynga, according to Bloomberg data.
Other early investors are still unable to sell their stakes, with their lockup periods ending in six phases over an 18-month period after the IPO.
Investors who were allowed to sell their shares this time round included Greylock Partners, Goldman Sachs, Microsoft, Accel Partners, and others.
The Facebook shares that were freed up for sale this time round totaled 271 mn, some 14 percent of the 1.91 bn shares that are affected by lockup periods. The biggest single tranche of locked up shares, totaling 1.2 bn, will be freed up for sale on November 14.
‘A lot of people are talking about this lockup period but we don’t think a lot of the insiders who can sell their shares will sell their shares any time soon,’ said Scott Kessler, an equity analyst at S&P Capital IQ who covers Facebook stock.
‘We think now is as good a time as we’ve seen to buy the stock. We expect the company to generate 25 percent revenue growth or more for each of the next three years. To us, this has become essentially a story about Facebook proving out its model,’ he said in an interview with CNN.
Facebook shares have fallen 47.7 percent since they were listed at $38 each and valued the company at $104 bn. They have since become the worst performing shares on the S&P 500 and the NASDAQ 100 amid concerns about the company’s revenue model and a loss of enthusiasm for the internationally famous name.
