As if on cue, Facebook stock tumbles -- again

That giant sucking sound: Facebook hits a new low as new shares come to market.

Sarah Tew

Well, this was predictable.

For weeks now, pundits, stock analysts and the media have been warning that Facebook shares -- already under pressure for a variety of reasons -- would face a fresh challenge when so-called "lockups" expire, allowinginsiders holding pre-IPO shares to start selling them.

And that's exactly what happened today, doubtless bringing joy to the many short sellers who bet on the stock to fall.

Today's "lockup" expiration was relatively small, with insiders now free to sell 271 million shares, adding to the 421 million already in circulation. Yet it was enough to do damage. On a day when the Nasdaq rose more than one percent, Facebook fell more than six percent to close at a record low of $19.87. (For those keeping score, that makes the still-not-approved Instagram acquisition, celebrated for its $1 billion price tag in April, now worth $757 million.)

No word yet on which insiders might have dumped their stock today, but it seems likely that some did considering that the day's trading volume was among the highest ever for Facebook.

Over the next nine months, more than 2 billion additional shares could hit the market as more "lockups" expire. The big one lurking hits on Nov. 14, when insiders will be free to sell 1.32 billion shares. The stock is now almost 48 percent of its offering price of $38.

Yahoo Finance

About the author

Paul Sloan is editor in chief of CNET News. Before joining CNET, he had been a San Francisco-based correspondent for Fortune magazine, an editor at large for Business 2.0 magazine, and a senior producer for CNN. When his fingers aren't on a keyboard, they're usually on a guitar. Email him here.

 

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