Facebook Shares Burned in Early Labor Day BBQ

Published on August 31, 2012
by John Paczkowski

Facebook’s already sagging stock slouched to a new low Friday amid mounting concern that the expiration of the IPO lockup restrictions that had prohibited early backers of the company from selling off their shares could drag down the value of Facebook’s stock.

Facebook shares tumbled well over 4 percent Friday morning to a record low of $18.23, leaving the company’s market value at less than half of what it was when it went public at $38 per share. An ugly decline, and one that analysts say isn’t likely to see repair for some time, with more post-IPO share lockups set to expire in the months ahead.

The expiration of Facebook’s first lockup on 271 million shares earlier this month tanked the stock. And with four more yet to go, there is clearly further volatility ahead. On Oct. 15, 249 million shares will become eligible for sale. On Nov. 14, the lockup will expire on 1.32 billion shares. On Dec. 14, another 49 million shares. And on May 13, 2013, the final 47 million shares.

“Facebook has multiple lockup expirations over the next year, and recent selling activity on the August lockup suggests to us the risk of future selling pressure,” Bank of America analyst Justin Post said in a note to clients today. “We wouldn’t expect the stock to see buying momentum until December.”

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