Facebook Inc (NASDAQ:FB) shares jumped 19 percent on
Wednesday on the back of quarterly
results which showed that the company was making money from mobile ads.
But come October 29 and more than 200 million shares
of the company will be released from lock-up and will be eligible to be sold in
the market.
In fact more than a billion shares are set to flood
the market in coming weeks in a staggered fashion - assuming of course, that
investors would still like to rid themselves of the shares.
Called restricted Stock Units, there shares are meant
to retain employees by giving them ownership in the company and to participate
in its growth. However when these shares are allotted to employees at time of
the IPO, there are placed under a lock-in for a specific period of time, the
idea behind this being that they should not sell the shares at the time of
listing and adversely affect the share price performance.
Now that the company has shown that it is able to
monetise its huge mobile user base and get revenues from mobile ads, it is
quite possible that investors may hang on to their holdings in the hope of
further appreciation in the stock price.
On Tuesday the company reported quarterly earnings
which surpassed estimates and mobile ad revenues came in at a good tick
contributing about 14 percent to total ad revenues.
The limited space on mobile devices makes it much more
difficult for Facebook to insert its desktop ad product into the stream without
feeling obtrusive.
Chief executive and founder Mark Zuckerberg has
achieved what he set out to do - dispel the myth that Facebook can’t make money
in mobile.
The social media site has kept investors' faith in it.
Now it is up to the investors to return the favour and exhibit their
confidence.
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