Facebook Stock Increases in Value in Early Trading after Lockup of Shares Expires

By Ed Silverstein November 14, 2012

Instead of shares of Facebook falling in value – after employees were permitted to sell some of their stock on Wednesday – the price of shares jumped in early morning trading.

Analysts had warned the stock could drop in price after 777 million shares belonging to employees and some early investors were unlocked, and could be sold.

Media reports said the stock edged up more than 10 percent to $21.85 – in the first half-hour of trading on Wednesday. It was selling for $21.55 by mid-morning.

Image via Shutterstock

USA Today reported a similar pattern happened in August when Yelp jumped more than 20 percent because fewer shares were being sold after a lockup was ended.

Earlier this year, shares of Facebook dropped after the company unlocked shares twice. In August, company shares fell six percent to a record low, and in October they fell three percent.

"While the lock-up is expiring, there is nothing requiring anybody to sell," Tim Ghriskey, chief investment officer at Solaris Group, told Reuters. "Given the low price, these long-term holders are deciding to hold the stock and that is lifting it here as the fear of the expiration subsides."

Additional shares will be allowed to go on sale in coming months. On Dec. 14, 156 million shares held by early investors and some others could be sold. Then on May 18, 2013 some 47 million shares held by Mail.ru Group and DST Global, who were early investors, could be sold.

The sales come after Facebook’s problem-plagued initial public offering in May. The stock has been a disappointment to some investors, TechZone360 reported.

Also, the company was trying to find a way this year to take advantage of the increasing use of mobile devices by consumers.

In August, TechZone360 reported that some of the causes of the falling stock price were an earnings report (which showed costs increasing more than projected) and lingering questions about future company growth. A few key executives left the company, as well. Also, Facebook reported this year that more than 83 million Facebook accounts were duplicates or fakes.

Edited by Brooke Neuman

TechZone360 Contributor

Related Articles

Jeff Bezos, Elon Musk Square Off on Rocket Firsts

By: Doug Mohney    11/25/2015

On Monday, November 23, Blue Origin successfully flew the first fully reusable rocket into space, giving the company first bragging rights. Founder Je…

Read More

Autonomous Car Technology Takes New Leap Forward With Ford, Uber

By: Larry Alton    11/24/2015

The age of the self-driving car is nearly upon us, or at least that's what major technology and automotive companies are hoping. There have been major…

Read More

Unusual but Fun Tech Ideas for 2015

By: Rob Enderle    11/24/2015

Well, it's the week of the big sales, and many of us are planning to buy that special someone a special something. I figured I'd join my peers and poi…

Read More

Locus Telecommunications is Challenging the FCC's Authority, Claiming Due Process Violations

By: Special Guest    11/24/2015

One of a handful of prepaid calling card companies slapped with a $5 million fine by the Federal Communications Commission (FCC or Commission) for its…

Read More

Kaspersky: Three Out of Four Users Have Trouble Spotting Big Threats

By: Steve Anderson    11/23/2015

We all know that spending on cybersecurity has been on the rise lately, as everyone from major corporations to military groups ramp up their cyberdefe…

Read More