800 million Facebook shares hit the market

The lockup period on the largest portion of the social network shares held by insiders ends on Wednesday as they become eligible for sale.

By Benzinga Nov 14, 2012 10:18AM

Fotosearch Fotosearch Getty ImagesBy Louis Bedigian


Updated: 10:12 a.m. ET

Facebook (FB) was bracing for a sell-off Wednesday when another share lockup expires. The stock closed down 1% on Tuesday as investors prepared for the worst. Instead, shares of the social network zoomed nearly 10% higher in early morning trade.


Brian Wieser, an analyst with Pivotal Research Group, told the Financial Post that the expiration could lead to a "near-doubling of the float of freely trading shares."

More than 1.3 billion shares were available on Tuesday. Nearly 800 million additional shares are scheduled to be added Wednesday -- more than any other period in the company's public history.

"We believe only a portion of newly free shares will be sold in the near-term," Wieser added.


But a "portion" could still amount to a significant loss. When the last lockup expired, Facebook dropped 5%, as TechCrunch reported.


Facebook currently trades near $20. If the stock matched the previous 5% decline Wednesday, it would have dropped below $19. Instead, it is trading at $21.75.


This day has terrified numerous investors. They couldn't decide whether they should sell or hold on to the stock for a little longer. After all, Facebook is now the proud social network with one billion members worldwide. If Facebook ever figures out how to properly monetize each of those users, the company could become one of the most profitable enterprises in the world.


Current shareholders would hate to miss out on that. But they may have been too scared to hold on to their investment. (This is why experts say that investors should not let their emotions control or influence their decisions.)


Whatever happens, Wieser is not too worried. "To the extent volumes do turn out to be heavy, downward pressure on the stock should be limited," he said, adding that "demand from institutional investors is likely to emerge if selling proved heavy at depressed prices." He believes that eager investors are "likely" to hold off until the stock trades at a more reasonable price.


"If significant selling did occur, institutional investors who have otherwise been sitting on the sidelines would initiate positions," he concluded. It seems Wieser was right.

On October 23, shares of Facebook rose significantly after the company reported its third-quarter results. The company continued to rise the next day, gaining 20%.

Wedbush Securities (which maintained its "buy" rating and $35 price target) was among the firms to praise Facebook's results. Stifel Nicolaus upgraded the stock from "hold" to "buy," while Jefferies raised its price target on Facebook stock from $30 to $32.


More from Benzinga

Nov 30, 2012 9:25PM
Does this include the shares I..even my own at home.
Nov 15, 2012 2:02PM

The entire stock market is manipulated by the big players and the Feds. Its a way for insiders to make legal profit and for ordinary investors to have a hope of a future profits. The manipulation of the stock market is a natural thing because big players and market makers have plenty of money to influence the market. This way they know its direction and they can benefit from that. When Michael Milken dominated junk bond market in the same way, some people like Rudy Guiliani and others did not like it and filed criminal charges against him. They shamelessly used RICO against him and his financial organization. I Wonder, if RICO was applied against Goldman or any other houses, would they withstand the pressure? Its a retorical question because we know they would NOT.  

Nov 14, 2012 12:19PM
And this is what Americans voted for....? So very sad.............
Nov 14, 2012 11:50AM

800 Mil Shares of a Company that Makes NOTHING


This one should sink FB faster than the Titanic.


Unfortunately the captain has already cashed in and won't be going down with the ship.

Nov 14, 2012 11:48AM
Morgan Stanley  had to keep buying the day of the IPO to maintain the $38 a share price. They bought with house money. Every time there has been a major lockup there has been a ton of buyers early in the morning that slowly declined later in the day.

Shorts had about 4% of the stock which does not account for the 80 million traded this morning......manipulation nothing more....it has already declined from the high and will drift slowly down over the next few days as none of the manipulators MS & GS and probably FB treasure dept will want to hold them till the end of the year.
Nov 14, 2012 11:37AM

"Facebook (FB) was bracing for a sell-off Wednesday …..Instead, shares of the social network are zooming nearly 10% higher in early morning trade."


It makes no sense. Exactly. Nothing about this stock has made sense since the day it went public, except that all the insiders have been cashing in as fast a furious as they can.


That includes Sheryl Sandberg, the companies glorified humanitarian COO, who has been doing the same over the last few weeks in preparation for leaving the company.


It’s more than manipulation. The whole thing is one big scam.

Nov 14, 2012 11:30AM
Nov 14, 2012 11:29AM
then explain this FB Shares   21.65+1.79+9.01%
Nov 14, 2012 11:24AM
The manipulation begins again ....they will say short covering but there were not that many shorts !!  I would bet my bottom dollar that MS and Goldman were waiting this morning to buy as many of the lockup shares as possible to avoid the appearance of a sell off .....they will sell them back slowly over the next few days ....back to $20 by eom and $17 by eoy.
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