Editor’s note: This article was first published in November 2012, as same-day market news from 14 November 2012. The 12.59% rise, the $19 buying interest, the remaining lockups and the analyst calls all refer to that day. Facebook has since become Meta Platforms.
The long-awaited, and potentially chaotic, day for Facebook has arrived. Today the ban on selling about 800 million shares of the world’s number one social network (known as a lockup) expired. It was a much-feared day, as it meant the biggest wave of new company shares hitting the market, and on previous expiry dates the stock had clearly turned lower.
Today Facebook surprised the market with a rise of 12.59%. That suggests that the employees and institutional investors holding these 800 million shares are not as afraid of losses as the earlier shareholders who chose to take profits as soon as possible. It helped that big investors had made it public that they were willing to buy shares at $19, as Facebook begins to clear up some of the market’s doubts about its business model.
Research firms are starting to change their recommendations on the company, since its latest quarterly results showed it can grow its mobile advertising revenue (the social network’s Achilles’ heel). Today firms such as Cantor Fitzgerald and Topeka Capital are saying that Facebook is a winning long-term investment and that we will soon see it above the $38 of its failed IPO.
Much of the rise is due to short sellers closing out positions they had opened in the expectation that Facebook would come crashing down today, which, to the bears’ disappointment, did not happen.
Two more lockup expiries are still pending, one in December and the last in May 2013, although the worst is over: today’s expiry was by far the largest in number of shares.
Featured image: Pi.1415926535, CC BY-SA 3.0, via Wikimedia Commons.
