Facebook shares slump 6% as lock-up period ends
The shares fell 6.27% to close at $19.87 on the Nasdaq yesterday, down from $20.74 on Wednesday.
This is one of the largest post-lock-up decline among companies that have gone public since 2011. Linkedin shares dropped about 7% when its lock-up period expired before rebounding, while Groupon fell 10% on its expiration day.
Some 421 million shares have been trading since Facebook shares were floated in May at $38 each.
Lock-ups prevent company insiders from selling their shares in a newly-floated firm, and usually start to expire 90 days from the initial public offering.
Over the next few months, up to 1.91bn more shares could come on to the market as various lock-in periods end.
Earlier this week Bloomberg reported high profile backers of Facebook’s IPO included George Soros, Steven Cohen’s SAC Capital Advisors, and Moore Capital Management.
Facebook’s IPO on 18 May this year raised $104bn. However, on the day of the IPO, Nasdaq had to delay the start of trading in the new shares following a glitch in its trading system.
Since then, Facebook’s value has crashed by 48%, with the company reporting a drastic slowdown in revenue growth for Q2.
The social networking giant also reported a second quarter loss of $157m, well below analyst expectations of a profit of $199.3m.