Hey, you know what really sucks right now? Owning Facebook stock. You know what’ll make it suck even more? When all the people who own Facebook stock dump it like its financial toxic waste. Which it is! So that’s a sound decision! It’s just going to be really bad news for Facebook when it happens!
Here’s the problem: Facebook has a lot of “locked-up” stocks. That means that there are people, mostly employees, who own stock in the company who aren’t allowed to sell it before a certain date. One of those lock-ups expired yesterday and oh brother was it ugly.
…[the] “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.
How can it get worse? Let’s find out!
Facebook’s problem is this: Over the next nine months two billion shares of this company are going to hit the market. Nobody wants Facebook stock now and more of it flooding the market is not going to do wonders for its price. And to think that Zuck is already saying that what’s happened to the company’s stock is “painful.”
This doesn’t mean Facebook will be bought out by Google or Apple. Only Mark Zuckerberg can approve that. It does mean, however, we’ll probably see increasingly desperate moves on Facebook’s part. Video banner ads, anyone?