Wednesday, September 5, 2012

Facebook Inc (NASDAQ:FB) shares rise on measures to safeguard price

Social networking site Facebook Inc(NASDAQ:FB)’s steps taken to infuse confidence among its investors on Tuesday, seems to be working.

On Wednesday, shares in the company were up 4.24 percent at $18.48 with more than 26 million shares being traded by mid-morning.

The company had said in a regulatory filing that founder and chief executive would not be selling his holdings in the company for more than a year.

It also said that senior executives, Marc Andreessen and Donald Graham, would not sell their holdings apart from what was required for them to meet their tax liabilities.

Another major measure was its intention to effectively buy back 101 million shares, when it issues previously restricted stock to its employees in October. Which means the company would be spending up to $2 billion to keep those shares from entering the market.

Has FB Found The Bottom? Find Out Here

Facebook shares have been battered ever since its IPO in May. The situation worsened in August when the market saw a flood of Facebook shares due to release of previously locked-in shares.

Large insider investors who had invested in the company before the IPO took the opportunity to offload their holdings in bulk, sending the stock price to new lows almost every day.

But the new initiatives taken by Facebook effectively ring-fence the stock from any further selling pressure.

They also serve to reduce the amount of Facebook stock in the market and will spread out the amount of shares that could hit the market in November when expiry of more locked-in shares occur.

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