Thinking about trading Facebook? Might want to hold off a bit longer . . .

Facebook (ticker: FB) was perhaps the most highly anticipated (read: “over-hyped”) IPOs in years.  Probably the most talked about this century.  And, as everyone knows, it tanked horribly after a quick spike, which didn’t last through its first day of trading. 

But with the fervor behind it, and currently trading around 1/2 the price it debuted at, some traders and investors are starting to look at picking it up. 

I don’t generally muck about with fundamentals, so won’t jump into the argument over how they intend to increase their cash flow and whether that makes FB a good investment or trade, but one thing certainly gives me the shakes when I think about jumping on a stock trading site to buuy some shares: lockup periods ending. 

There are a ton of shares which are out of the game, right now, locked up for regulatory reasons.  Once they are released to the wild, we don’t know how many will immediately be for sale, but very recent history (see article below) suggests an answer: a lot. 

That could present an enormous head wind for any bullish position.   I’m not saying FB is a buy or a sell, but the prudent trader/investor should bear in mind that the next few months are likely to be difficult ones for the shares (and anyone holding them). 

-Timorous



Here’s When Other Facebook Insiders Can Sell Stock

Published: Tuesday, 21 Aug 2012 | 3:58 PM ET
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By: Reuters
 

Last week, Facebook’s early investors and some directors became eligible to sell stock they own in the social networking company. Others will have similar rights in the coming months.

Up to 1.91 billion more shares could flood the stock market — more than four times the 421 million shares that had been trading since Facebook’s [FB  19.22    0.061  (+0.32%)   ] initial public offering in May.

Facebook’s stock has fallen since last Thursday’s expiration of the first lock-up period. On Monday, it’s disclosed that Peter Thiel, one of Facebook’s earliest investors and a member of its board, was among the insiders selling stock after the lock-up period expired. He sold about 20 million shares through affiliates for $19.27 to $20.69 each.

(Read More: Investor Thiel Unloads Most of His Facebook Shares)

Here’s the schedule, as reported by Facebook in a regulatory filing:

  • Aug. 16: 271 million shares held by early investors and directors who had participated in the IPO, though CEO Mark Zuckerberg is excluded for unspecified reasons.
  • Unspecified date between Oct. 15 and Nov. 13: 243 million shares and stock options held by directors and former or current employees, excluding Zuckerberg.
  • Nov. 14: 1.22 billion shares and stock options, about a third of which is controlled by Zuckerberg.
  • Dec. 14: 149 million shares held by early investors and others who participated in IPO, except Zuckerberg.

(read entire article here)

Wednesday, August 22nd, 2012 Education, News, Stock Trading

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