Mike Isaac

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F-Bomb: Wall Street Eyes Facebook’s Ticker With 271 Million Employee Shares About to Drop

As many Facebook employees’ restricted stock units vested on Thursday, all eyes will be on the social networking site’s share price come early November.

That’s when 271 million shares of the company’s stock will be issued to pre-2011 Facebook employees, and those shares will be available for trade on the Nasdaq for the first time next week.

That includes upwards of 45 million shares from six members of Facebook’s executive team, according to a series of SEC filings made Friday: Facebook VP general counsel Ted Ullyot, COO Sheryl Sandberg, marketing VP David Fischer, VP of engineering Mike Schroepfer, CFO David Ebersman and chief accounting officer David Spillane.

It’s good news for early employees who want to finally spend some of their hard-earned stock on any number of creature comforts.

But it might not be for beleaguered investors of Facebook.

The thing to watch, of course, is just how many employees decide to cash out right away. If too many shares flood the market at once, it could deal another blow to the company’s stock price, which has already had a rough time, cut nearly in half from its initial price of $38 down to a low of $17.55 during its first six months on the Nasdaq.

This is only one in a series of lock-up expiration dates. The first occurred back in August, which allowed Facebook’s original investors (such as Peter Thiel) to sell shares.

But the big stock vesting has yet to come. On November 14, upwards of one billion employee shares become tradable on the public market.

There is no way to tell who will be selling among the company’s 3,000-plus staffers. But it is reasonable to expect staggered sales from the company’s executive team. Since they’re privy to inside information at the highest levels, they’re required to sign up for a plan which sells shares automatically over a pre-determined period of time (under SEC Rule 10b5-1, for the finance wonks out there).

Ideally, it’ll keep the market from jumping every time an executive team member sells off shares, and it’s a common practice across major public companies.

One person who won’t be selling right away? CEO Mark Zuckerberg, who has vowed to wait at least a year until cashing in any of his giant pile of stock.

Shares of Facebook closed down 2.74 percent on Friday afternoon, and were down .24 percent in after-hours trading.

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I think the NSA has a job to do and we need the NSA. But as (physicist) Robert Oppenheimer said, “When you see something that is technically sweet, you go ahead and do it and argue about what to do about it only after you’ve had your technical success. That is the way it was with the atomic bomb.”

— Phil Zimmerman, PGP inventor and Silent Circle co-founder, in an interview with Om Malik