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Facebook shares fall by 5% as lock-up period ends Facebook shares fall by 6% as lock-up period ends
(about 4 hours later)
Facebook shares have fallen heavily as the first lock-up period, which stops sales by early investors, ended.Facebook shares have fallen heavily as the first lock-up period, which stops sales by early investors, ended.
Shares fell 4.95% to $20.15 in afternoon trade in New York, down from $20.74 on Wednesday. Shares fell by 6.27% to $19.87 at close of trade in New York, down from $20.74 on Wednesday.
About 271 million shares become eligible to be sold on Thursday, which is more than half the 421 million that have been trading since Facebook shares were floated in May at $38 each.About 271 million shares become eligible to be sold on Thursday, which is more than half the 421 million that have been trading since Facebook shares were floated in May at $38 each.
Since then, Facebook's share price has fallen, amid worries over its strategy.Since then, Facebook's share price has fallen, amid worries over its strategy.
In early trade on Thursday the shares were down by more than 6%.In early trade on Thursday the shares were down by more than 6%.
Lock-ups prevent company insiders from selling their shares in a newly-floated firm, and usually start to expire 90 days from the initial public offering (IPO).Lock-ups prevent company insiders from selling their shares in a newly-floated firm, and usually start to expire 90 days from the initial public offering (IPO).
They are designed to prevent the share price from fluctuating wildly if too many investors decide to sell their shares all at once.They are designed to prevent the share price from fluctuating wildly if too many investors decide to sell their shares all at once.
Eligible sellersEligible sellers
This week, Facebook's operating chief Sheryl Sandberg and finance chief David Ebersman are eligible to sell stock they own. Microsoft, an early Facebook shareholder, will be free to do so too. Other eligible investors include Goldman Sachs and Accel Partners.This week, Facebook's operating chief Sheryl Sandberg and finance chief David Ebersman are eligible to sell stock they own. Microsoft, an early Facebook shareholder, will be free to do so too. Other eligible investors include Goldman Sachs and Accel Partners.
However, Mark Zuckerberg, Facebook's chief executive, will not be able to sell his shares until mid-November.However, Mark Zuckerberg, Facebook's chief executive, will not be able to sell his shares until mid-November.
Recent tech companies that have floated have seen their share prices fall following the expiration of lock-up periods.Recent tech companies that have floated have seen their share prices fall following the expiration of lock-up periods.
Linkedin shares dropped about 7% when its lock-up period expired before rebounding, while Groupon fell 10% on its expiration day.Linkedin shares dropped about 7% when its lock-up period expired before rebounding, while Groupon fell 10% on its expiration day.
Facebook has lost some of its lustre since its May flotation and after reporting a $157m loss in the second quarter, although most of the loss was due to pay-outs to the company's early investors, including chief executive Mark Zuckerberg.Facebook has lost some of its lustre since its May flotation and after reporting a $157m loss in the second quarter, although most of the loss was due to pay-outs to the company's early investors, including chief executive Mark Zuckerberg.
There are concerns over Facebook's revenue streams, and whether it can make money from people using the site on mobile devices, as users move from the computer desktop version to accessing the site via mobile phone.There are concerns over Facebook's revenue streams, and whether it can make money from people using the site on mobile devices, as users move from the computer desktop version to accessing the site via mobile phone.
The company is now making less money from each user as it becomes more difficult to generate advertising revenue.The company is now making less money from each user as it becomes more difficult to generate advertising revenue.
Including the shares that became eligible for trade on Thursday, over the next few months, up to 1.91bn more shares could come on to the market as various lock-in periods end.Including the shares that became eligible for trade on Thursday, over the next few months, up to 1.91bn more shares could come on to the market as various lock-in periods end.
The next lock-up periods expire on the following dates:The next lock-up periods expire on the following dates:
• 15 October: 249 million shares• 15 October: 249 million shares
• 14 November: 1.32 billion shares• 14 November: 1.32 billion shares
• 14 December: 49 million shares• 14 December: 49 million shares
• 13 May 2013: 47 million shares• 13 May 2013: 47 million shares