Fears Confirmed: Facebook Lockup Expires and Shares Tumble
Facebook (NASDAQ:FB) unlocked 229 million shares for trading last week, and as many investors predicted, employees and executives decided to cash in. Shares have slid nearly 14 percent since October 24, once again dropping below $20 per share in morning trading on November 9.
Chief operating officer Sheryl Sandberg, reportedly on the radar to replace Treasury Secretary Timothy Geithner, has pocketed over $11 million dollars since the initial lock up expired. The transactions were part of a trading plan Sandberg adopted in July, so the trades aren’t a huge surprise. She still owns a whopping 19 million shares in the company.
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Chief accounting officer David Spillane sold about 256,000 shares for $5.4 million. Facebook general counsel Theodore Ullyot sold 159,000 shares for $3.13 million.
Facebook had about 692 million floating shares at the end of September, but that number has shot up to 1.3 billion by November 9. November 14 marks the next large lockup expiration, with 1.3 billion more set to hit the market.
Facebook’s record $100 billion IPO and subsequent 40 percent plunge in value has brought a lot of negative attention on social and Internet companies. Facebook has served as a keystone for several stocks, most notably Zynga (NASDAQ:ZNGA), but also companies like Groupon (NASDAQ:GRPN). They all launched surrounded by massive excitement and unproven revenue models, and have all subsequently seen the price tags on their stocks shrink dramatically.
Russian social networking group Mail.Ru has apparently had enough of the wacky ride, selling off large parts of its stake in each company. Mail.Ru has gone from owning 0.75 percent of Facebook, 1.17 percent of Zynga, and 4.12 percent of Groupon, to 0.52 percent of Facebook, 0.16 percent of Zynga, and 0.84 percent of Groupon. The rest of Mail.Ru’s shares will come out of lockup in May.
For his part, Mark Zuckerberg has promised not to sell any of his shares. Many investors share his belief that Facebook has long-term potential, despite struggling to monetize. The company’s most recent earnings showed progress in mobile advertisement, but it’s clear there’s a hard road ahead.
Analysts hold a mean price target of $28.75 for the stock, and the recommendation trend falls between “Buy” and “Hold.”