Facebook’s stock continued to take a massive beating today as the first stage of the lockup period ended, freeing insiders to sell around 270 million shares on the open market. It has been exactly 3 months since Facebook went public, and this is just the beginning of the end of the lockup period.
The added liquidity following the expiration of the lockup period usually leads to selling pressure, which leads to a drop in a stock’s price, despite the fact that it is already public knowledge.
Close to 1.8 billion shares of Facebook are expected to be added to its free float in the coming months. That would almost double its outstanding share count, which combined with the speculation surrounding whether or not Facebook can successfully monetize its rapidly growing mobile audience, could easily lead to a further massive dip in its already underwater stock price.
Facebook is trading at around $19 today, which is nearly half of what it went public at.
At this valuation, most of its late stage investors like Goldman and possibly DST have incurred losses, and most of the public investors which invested in its IPO have already seen the value of their investment dip around 50%.
The only impetus that Facebook’s could possibly get would be during its next quarterly earnings, if at all it figures out its mobile monetization dilemma.