Facebook Share Value Gets Big Push After Final ‘Lockup’ Ends
Facebook investors finally had a reason to celebrate on Wednesday when the social networks shares increased in value by 13 percent. The increase came about after the company’s final “lockup” on shares expiry failed to lead investors to a massive sell off in shares.
The lockup periods end added 800 million new shares of Facebook stock to the pool of 921 million shares already available on the open market.
Ryan Jacob, chief executive of the Jacob Funds, says of the increased share prices:
“We’ve seen this before with other lockups. People sell them leading up to the lockup period expiring, and then they have a bit of a relief rally.”
While Tim Ghriskey, chief investment officer at the Solaris Group, adds:
“While the lockup is expiring, there is nothing requiring anybody to sell. Given the low price, these long-term holders are deciding to hold the stock, and that is lifting it here as the fear of the expiration subsides.”
Lockup offers are a common practice that many company’s use to regulate the number of shares available on the open market for periods ranging from three months to one year. The Lockup essentially helps prevent a depression of the sale price in a company’s shares that can happen if massive selloffs occurs.
As the lockup for Facebook drew to an end on Wednesday morning, Facebook stock witnesses four times greater than average trading and closed at $22.36, a 12.6 percent increase.
Analysts expected Facebook shares to trade frequently in the coming weeks with a stable price range.