Wednesday, October 17, 2012

Facebook Inc (NASDAQ:FB) Is Going To Experience Another1.2 bn shares Tsunami?

Facebook Inc (NASDAQ:FB investors and shareholders should have marked October 29 in red on their calendar as that is the day on which another huge tranche of shares of the company are released from lock-up and may (or may not) flood the market.

In fact before the end of the year there are three expirations coming up that will collectively unleash about 1.2 billion shares into the market.

The float of the company will go up by nearly 90 percent from the levels today, which is a huge amount of stock that will be available and putting huge pressure on the price of the shares.

On October 29, 234 million shares will be released from lock-in, on November 14, 777 million shares will be freed up while December 15 will see lock-up expiry on another 156 million shares.

Employees and venture funds who were allotted the stock long back will be eligible to sell their holdings if they want to.

Facebook, which briefly saw resurgence after founder Mark Zuckerberg talked up the stock with his positive comments in early September, has again been dipping.

The further fall in share prices could well spook holders of Facebook stock into selling off their stakes.

Seekingalpha.com, which did an analysis of Facebook's shares, has pointed out that "Facebook's share count dwarfs some of the largest and most established technology companies in the world."

It said that the 1.2 billion shares that will be freed up are "more than the total shares outstanding for Amazon (AMZN), Google (GOOG), Salesforce (CRM), LinkedIn (LNKD) and Rackspace (RAX) combined!"

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