Wednesday, October 31, 2012

Facebook Inc (NASDAQ:FB) Shares Slump As Another Lockup Expires

After monitoring the investment plunge for six long months, the major question lingering over Facebook Inc(NASDAQ:FB) is how many insiders are likely to dump their shares as the so-called lockup comes to an expiry.

One such expiration has passed this Monday, although without any buying or selling, since the markets were closed because of Hurricane Sandy. The shares that missed the market on Monday are likely to hit today. Nearly 229 million shares were eligible to hit the market on Monday. These shares include the ones that are issued to employees before 2011 and some that are owned by earlier insiders.

There is, however, no way to find out the worker that cash his shares, since only the biggest holders need to file forms with the SEC. however, one person, who surely would not be selling soon is Mark Zuckerberg as he has said that he would not cash in stock for minimum another year.

The lock-up expiration presents a valuable chance for the top executives of the company to convert paper wealth into outstanding riches. It was last Friday when 6 executives including CFO David Ebersman and COO Sheryl Sandberg saw a main portion of their shares being converted into common Class A shares. This allows them to sell their stocks in the open market. Sandberg’s shares are now valued at $396 million apart from taxes, at a price of $22 each share, while Ebersman’s stock is worth $48.4 million apart from taxes.

The next lockup expiry date is 14th November when all employees of Facebook, who joined before 2011, can sell their pre-IPO shares, with other early holders.

Shares of FB slid 3.20% to $21.24, although off session low of $20.73.

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