Thursday, November 1, 2012

Facebook Inc (NASDAQ:FB): How Many Insiders will Cash In after Lock-Up Expiration?

Investors of Facebook Inc(NASDAQ:FB) have watched their money sinking deeper and in the last 6 months, which has given rise to the question as to the number of insiders selling off shares after the lockup expires. There was an expiration on Monday without any buying or selling due to the markets being closed due to Hurricane Sandy. The stocks comprises of shares given to employees before 2011 and some belonging to earlier insiders. The number of shares in the open market will go up by 73% to 1.2 billion+ shares by the year end.

Only major shareholders have to file forms in the SEC so there is no technique to know if an employee has cashed his/her shares, but CEO Mark Zuckerburg has clearly mentioned in the previous month that he would not cash in any stock for the next 12 months. The lock-up expiration is a boon for top executives of the company as they get the opportunity to transform paper money to hard cash. Six executives including COO Sheryl Sandberg and CFO David Ebersman can now sell stocks in the open market, because most of their stock has been converted to ordinary Class A shares. The stock of Sandberg and Ebersman are valued at $396 million and $48.4 million after taxes respectively.

The upcoming lock-up expiration is about 2 weeks away on 14th November which allows all Facebook employees, who are with the company before 2011, to sell their vested pre-IPO shares, along with other early holders. 14th December is yet another date for lock-up expiration when more than 155.9 million shares will be available in the market. In 2013, the expiration date is on 18th May, which releases shares currently under Mail.ru Group Limited and DST Global Limited.

The stocks of Facebook had been going down since its initial offering, but it has moved up to $23, with the revenue being slightly stabilized and positive future prospects as stated by Zuckerburg.
Shares of FB ended lower by 3.80% to $21.11.

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