Facebook plumbs new lows as sales curbs start to expire
By Alexei Oreskovic and Ryan Vlastelica
SAN FRANCISCO/NEW YORK (Reuters) - Facebook Inc shares sank 6.3 percent to a record closing low after early investors got the greenlight to sell for the first time since the No. 1 social network went public, starting a string of insider lockup expirations that will pressure the stock for months.
More than 270 million shares owned by early investors became available for trade on Thursday after a 3-month curb on sales ended. That's more than half the 421 million shares sold in its initial public offering on May 18.
The company founded by Mark Zuckerberg in his Harvard dorm room became the only U.S. company to debut with a market value of more than $100 billion.
But investors have since grown disillusioned with Facebook's inability to articulate a plan to reverse slowing revenue growth - due in large part to its limited mobile advertising efforts - sending the stock down almost 50 percent from its $38 debut.
Many investors remain unnerved by the massive flood of shares still waiting to be released: More than 1.4 billion additional shares will be eligible for selling by year's end, nearly tripling the amount available for trade.
Analysts say Thursday's frenetic trading offers a taste of what may transpire in November, when many of the social network's employees get to cash in stock awards for the first time.
"An incredible amount, all the shares coming," said Steve Birenberg, president of Northlake Capital Management and portfolio manager for Entermedia Growth Partners, a hedge fund.
"It's important because it adds to the negative sentiment. You've got a big overhang of stock, you've got decelerating growth ..., everything out there now is sort of spun negatively." Continued...