Facebook hits new low as IPO lock-up ends
Thursday, August 16, 2012
SAN FRANCISCO (AP) — Facebook’s stock plunged to a new low Thursday after the expiration of a ban that had prevented some early investors and insiders from dumping millions of additional shares they own in the social-networking leader.
Firms ranging from Accel Partners to Goldman Sachs, Zynga CEO Mark Pincus and Facebook board members James Breyer, Peter Thiel and Reid Hoffman were among those free to sell stock they own, after the lifting of a ban known as a lock-up period.
If many of them took advantage of that, Facebook’s stock could decline because the market would be flooded with more shares.
It’s not yet known whether any of those investors had sold any stock because they have three business days to disclose any sales, said Sam Hamadeh, the CEO of PrivCo, which researches privately held companies.
But many of them likely did, he said.
Venture capitalists who invested in Facebook as early as 2005 were likely itching to sell at the earliest opportunity. Though it’s trading at about half of its IPO price, Hamadeh said Facebook’s stock is still very expensive.
Only 271 million shares became eligible for trading Thursday, but by the time all the lockups expire, that’ll come to 1.91 billion. That’s nearly four times the 421 million shares that had been trading since Facebook began trading publicly 90 days ago.
Facebook Inc.’s stock traded as low as $19.69 before bouncing back to $20.14 in afternoon trading Thursday. That’s still 5 percent down, or $1.06, from Wednesday’s close and about 47 percent below its initial public offering price of $38.
If the stock hits $19, it will have lost half its value since Facebook went public in May.