Facebook Falls Below $19 Amid Looming Lockup Expiration

Facebook Inc. (FB) shares fell to the lowest intraday price in three weeks on concern that shareholders will start selling their shares when a prohibition on the transaction expires.

The stock declined as much as 1.8 percent to $18.87, the lowest since Oct. 19. It had slipped 1.1 percent to $18.99 as of 12:15 p.m. in New York. Restrictions on the potential sale of 804 million shares lift on Nov. 14, followed by another 156 million on Dec. 14.

Facebook has lost about half its value since selling shares at $38 apiece in a May initial public offering. Current and former Facebook employees who have seen the value of equity compensation plunge can sell as lockups designed to prevent a flood of shares immediately after the IPO expire. The company showed in its most recent earnings report that it’s making headway generating revenue from mobile advertisements, keeping the stock from dropping more steeply.

“Buckling of the stock would occur because of lots of selling at the same time,” said Brian Wieser, an analyst at Pivotal Research Group. “It seems like there’s enough demand to absorb this. Investors would have been a lot more nervous if third quarter numbers hadn’t come out well.”

Sales rose 32 percent to $1.26 billion in the period that ended in September, Facebook reported last month, beating analysts’ estimates. Profit excluding costs such as stock-based compensation and related payroll taxes was 12 cents a share, compared with the average estimate of 11 cents a share.

Another 47.3 million shares become available for trading in May. Shares held by Chief Executive Officer Mark Zuckerberg aren’t part of the tally because he has said he won’t sell before September of next year.

The first lockup on Facebook stock expired August 16, freeing up 271.1 million shares held by early investors including DST Global Ltd., Goldman Sachs Group Inc., Elevation Partners and Accel Partners.

To contact the reporter on this story: Lisa Rapaport in New York at lrapaport1@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net

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