With Thursday bringing the first expiration date on Facebook’s insider lock-up, share prices fell to a new low as partner companies and investors such as Goldman Sachs were able to sell their own stock in the company for the first time.
Share prices tumbled down to $19.69 before leveling at $19.87 by closing time Thursday. That figure is roughly half the value of its original IPO price, when shares debuted at $38 in May. Wall Street insiders saw many of their fears realized as investors seem to be cutting their losses in the midst of the Facebook downturn. Though investors are not yet required to reveal whether they traded their stock in the company, and it is unknown how many of the combined 271 million shares that were made available on Thursday have moved.
“Certainly some of them sold. The question is how many of them sold and how much of their holdings they sold,” Pivotal Research analyst Brian Wieser told the Los Angeles Times. “The big issue is, was and always will be November.”
Come November, some 1.2 billion insider shares will be eligible for sale from Facebook’s remaining investors. Share prices could see an even bigger hit if investors flood the market looking to sell what they have once they are eligible. Thursday’s initial expiration has been considered by most analysts as simply “a dress rehearsal” for the larger November expiration, which could impact the company’s market value tremendously.
Facebook has seen a drop of almost $50 billion in its market value, just months after being viewed as one of Silicon Valley’s best up-and-coming businesses. Thursday brought a 6.3 percent decline in value for Facebook Inc. stock, the second worst figure coming out of a lock-up for any company that has gone public since January 2011. This certainly does not bode well for November’s expiration, and current Facebook investors.
“There simply is no relief on the horizon for Facebook stockholders,” Sam Hamadeh, CEO of private company researcher PrivCo said. “It will get worse before it gets better.”
