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

SHARE THIS ARTICLE
Related Articles

Why Blockchain Could Be a Gamechanger

By: Paula Bernier    1/22/2018

Blockchain has become closely associated with the controversial topic of cryptocurrency. And that's fine because blockchain is an enabling technology …

Read More

Consumer Privacy in the Digital Era: Three Trends to Watch

By: Special Guest    1/18/2018

Digital advertising has exploded in recent years, with the latest eMarketer data forecasting $83 billion in revenue this year and continued growth on …

Read More

CES 2018: Terabit Fiber - Closer Than We Think

By: Doug Mohney    1/17/2018

One of the biggest challenges for 5G and last mile 10 Gig deployments is not raw data speeds, but middle mile and core networks. The wireless industry…

Read More

10 Benefits of Drone-Based Asset Inspections

By: Frank Segarra    1/15/2018

Although a new and emerging technology, (which is still evolving), in early 2018, most companies are not aware of the possible benefits they can achie…

Read More

VR Could Change Entertainment Forever

By: Special Guest    1/11/2018

VR could change everything from how we play video games to how we interact with our friends and family. VR has the power to change how we consume all …

Read More