On Wednesday, 800 million Facebook shares were sold or distributed, becoming available for trade as part of the social networking giant’s unlocking of shares. The locked up shares were part of the agreement when Facebook went public – shareholders weren’t allowed to sell their shares for a certain period. Though unlocking shares usually results in stocks’ devaluation, Facebook’s shares actually jumped by 12.59 percent.
“While the lockup is expiring, there is nothing requiring anybody to sell,” said Tim Ghriskey, chief investment officer at Solaris Group in Bedford Hills, New York. “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.”
Facebook announced which of their shareholders took part in the unlocking program. Before this even took place, there were rumors that Andreessen Horowitz was selling its stake in Facebook, but that’s not entirely true. What happened was Andreessen Horowitz distributed a total of around million 4.64 million shares with the majority derived from Andreessen Horowitz’s investment in Instagram (later acquired by Facebook), not from their direct investment in Facebook. Andreessen also is selling some personal shares to cover personal tax liabilities.
Marc Andreessen received a distribution of 7,755 shares related to his limited partnership interest in Greylock which brings the Andreessen/Andreessen Horowitz hold on shares to a total of 3.87 million.
Before the lockup expired, Jim Breyer of Accel Partners distributed 3.5 million of personal shares while Accel Partners distributed 22 million shares.
As for Facebook CEO Mark Zuckerberg, no info as to whether he sold or distributed his shares, but so far, the ones he did sell was used to cover tax obligations, and was donated to charitable foundations. Zuckerberg pledged that he won’t be selling any more stock until September of next year.
For Breaking Analysis from SiliconANGLE Founder John Furrier
Yesterday the lock-up agreement covering 777 million shares held by Facebook insiders expired putting the pile of shares up for free trading. How did the market respond? Here with his breaking analysis on the potential Facebook fire sale is SiliconANGLE Founder John Furrier.
*# Facebook shares became eligible for sale yesterday after restrictions on insider selling were lifted on the biggest block since Facebook’s May initial public offering. An SEC filing detailed which Facebook directors distributed or sold stock on Wednesday. What can you tell us about the filing?
*# Investment firm Andreessen Horowitz was rumored to have been selling a large portion of its stake however in actuality, the majority of the distributed stock was derived from their investment in Instagram (which was later acquired by Facebook for cash and stock), rather than from their direct investment in Facebook. The remainder of the sale was that of personal shares to cover tax liabilities. A16Z did not cash out the direct investment it made in Facebook years ago. A partner of the Andreessen firm said “we’re holding on to it because we believe in the long-term value of the company.” John, were you surprised at the number of distributions that took place yesterday? Do you think it was less than Wall Street anticipated?
*# Do you think the surge of sales was dissipated because people were selling them leading up to the lockup period expiring?
*# To date, Mark Zuckerberg has only sold shares to cover tax obligations, and donated some to a charitable foundation. He has pledged not to sell any of his holdings until September 2013. What is his reasoning behind this?
*# Facebook shares finished Wednesday’s regular trading session up 12.59% at $22.36 on the Nasdaq, with trading volume for the stock more than four times the average during the past 50 days. Facebook also delivered better-than-expected third-quarter results on October 23 and revealed that 14 percent of its advertising revenue is now from mobile ads, reassuring some investors. Now that the last major lockup expiration has passed and the share price actually soared, do you think investors are going to start believing that Facebook can produce revenue growth in the mobile market?
*# Mark Cuban has spoken out publicly about his disbelief and doubt regarding Facebook’s latest revenue models. Should investors be listening or is Mark Cuban misunderstanding Facebook’s value proposition?
*# What are your predictions for Facebook’s stock future?