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

Apple's iPhone 7 Set to Show in August, Sell in September

By: Steve Anderson    5/22/2015

It's hard to believe, but we've already been with the iPhone 6 and the iPhone 6 Plus for almost a year; since September, these devices have been at th…

Read More

Twitter, Google Kick Off Search Integration

By: Tara Seals    5/22/2015

Twitter and Google have kicked off a user engagement campaign that brings Tweets to Google Search.

Read More

Interested in a Chromebook? 7.3 Million Will Be This Year

By: Steve Anderson    5/22/2015

Admittedly, Chromebooks probably don't top a lot of wish lists, but a new report from Gartner suggests that this breed of inexpensive cloud-driven lap…

Read More

LogJam Computer Bug Creates Another Ruckus

By: Peter Bernstein    5/21/2015

When it comes to malware and other types of computer bugs it seems like we are falling into a problematic pattern: it consists of researchers or "ethi…

Read More

Network Shifts to Support Video Distribution

By: Tara Seals    5/21/2015

Network strategies are underpinned by many aspects. It starts with consumer adoption of online and mobile video in droves. It continues with local cac…

Read More