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Wednesday, November 14, 2012

Facebook D-Day?

Today is when 777 million more shares of the No. 1 social-networking company are unlocked and available for sale. The bulk of rank-and-file employees who put their financial lives on hold hoping to sell and lock in gains finally get their chance.

These will be added to the 1.3 billion shares of Facebook stock trading, of its 2.2 billion shares outstanding, that already are giving Wall Street a case of indigestion.
This looming opportunity for employees to sell has been unnerving Facebook investors since the company went public May 18. Lockup period expirations are customary with initial public offerings.

Employees, officers and early investors are typically required to wait several months before they can sell, preventing an avalanche of selling pressure to beat down a fledgling stock.
Facebook's reaction will hinge on whether more or fewer employees than expected sell. According to analysts, shares of online review site Yelp actually rose more than 20% in late August after a lockup because selling was smaller than anticipated. The same could happen at Facebook.  Let’s wait and see…
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