Facebook looks to Allay Fears of Investors

After Facebook went public in May, the stock has not exactly lived up to the hype the IPO had been previously given before it happened. The stock has consistently performed rather poorly on the market, currently having fallen to about half of its initial price of $38 per share.

Earlier this week, the stock fell to a record low of $17.73.

When the social network giant went public, there were several “lockup” periods imposed which meant that original stockholders could not sell their shares immediately. The first lockup period expired in August with another one set to follow in October.

When August arrived, there was some selling of stock. For instance, original Facebook investor and board member Peter Thiel had unloaded a lot of his stock as soon as his lockup period expired. This was said to be unrelated to the stock performance, that he had always intended on cashing out when eligible.

For the past few weeks, several media outlets have been reporting that the November 14 lockup expiration date would be telling. At this time over a billion shares of stock could flood the market. This is also the time when Facebook CEO Mark Zuckerberg is eligible to start selling off his own shares of the company he founded.

There are worries that as these lockup dates expire and massive amounts of stock are sold, the price will be driven down even further. Many have been wondering whether or not Zuckerberg was going to begin to cash out as well.

According to reports, however, Zuckerberg intends to hold onto his shares beyond the November 14 expiration. The Los Angeles Times reported Facebook said in a regulatory filing earlier this week that Zuckerberg would hold onto his shares for at least the next 12 months.

“The Street has been heavily focused on the large lock-up expirations coming in October and November, and we believe the combination of taking Mark Zuckerberg’s shares out of that equation and also shrinking the outstanding share count by 101M shares (~3.7%) shows management’s confidence in Facebook’s long-term story,” J.P. Morgan analyst Doug Anmuth wrote in a research note late Tuesday (courtesy Los Angeles Times).

Business Week has shared the schedule of each lockup period and who is eligible to sell when that date arrives.

Facebook’s long-term performance still remains to be seen. Currently, the company is making a big push to monetize mobile. It also just completed its purchase of photo-sharing site, Instagram.