Market Dances Around Discounting Facebook Lockup Expiration

Facebook Inc. (NASDAQ: FB) is finally getting its lockup expiration out of the way. Today is the day that some 271 million shares are being freed up for certain insiders and backers to unload into the public market. While this is a 60% possible increase to the float, it seems as though the lockup expiration may have been more noise than news. That being said, the market has not adequately discounted the lockup expiration.

Goldman Sachs Group Inc. (NYSE: GS) and firms such as DST Global, Elevation Partners (aka Bono), Accel Partners and others will be free to sell shares they have held. Even after a 50% correction in shares of Facebook, many of these investors are way up on the deal. At issue is whether these investors feel like the $45 billion or so market value will rise back up or whether the value is still frothy. As far as those investors like GSV Capital Corp. (NASDAQ: GSVC), let's just say that the market has given up caring about them.

Another issue is management versus mobile. Maybe it will only be a short time before Facebook can figure out how to make mobile work for it. The larger issue is whether investors want to ride along in the passenger seat with Mark Zuckerberg and friends after all of the antics and knowing that they have no real voice at all.

Facebook is one of the companies where shareholders have no power - at all.

If the stock market is supposed to be a discounting mechanism, let's just say that the stock market has failed in discounting events. Facebook's IPO lockup expiration is no secret, and it has been about as well-telegraphed as the sun rising in the east and setting in the west.

Facebook's shares were down 5.4% at $20.03 on more than 15 million shares right after the open.

JON C. OGG


Filed under: 24/7 Wall St. Wire, Active Trader, Internet Tagged: FB, GS, GSVC

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James Wn

The Facebook 10-Q report filed to SEC on July 31st predicted today's price move:
"Substantial blocks of our total outstanding shares may be sold into the market when “lock-up” end...the price of our Class A common stock could decline."

pdf.secdatabase.com/805/0001193125-12-325997.pdf

Date Available for Sale into Public Market:
08/16/2012 271 million shares
10/15/2012 to 11/13/2012 243 million shares
11/14/2012 1,197 million shares
12/14/2012 149 million shares

August 16 2012 at 6:39 PM Report abuse rate up rate down Reply