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Facebook frees up 60% more shares today

• jonknee 14y ago
  It's down 5.47% early... Not a good sign, almost ready to break through the $20 barrier. http://www.google.com/finance?q=NASDAQ:FB http://www.google.com/finance?q=NASDAQ:FB
  • kami8844 14y ago
    yup, just broke through $20.00 at 10:00am EDT
    • deleted 14y ago
      [deleted]
      • kokey 14y ago
        People who thought the IPO was 100% overpriced.
  • maartenscholl 14y ago
    6.7% down. It looks like it's already passing it's 30-day VMA. This is bad news because the unfreezing dates have been known since IPO, and the large volume implies that people are eager to liquidate their shares.
  • phatbyte 14y ago
    $19,90 at 5pm UCT time, not good indeed
  • danweber 14y ago
    A fall when a bunch of people can suddenly sell is a normal thing. And those insiders should sell parts of their positions. They are very heavily invested in FB and need to diversify, even if they believe FB is a very wise investment. Many insiders probably have more than 90% of their portfolio in FB stock.
• AndrewDucker 14y ago
  And seven times as many over the next 9 months. I hope that's already priced in...
  • truebecomefalse 14y ago
    Wow. I guess they hope they will have stabalized things after a few more quarters.
• tokenadult 14y ago
  From the article, with ellipsis as shown: "Facebook, worth $51.2 billion, has lost about $40 billion in market value since the IPO, making it the worst performer among all large IPOs on record, according to data compiled by Bloomberg. . . . . "'It certainly wouldn’t behoove and wouldn’t be in the shareholders’ best interest to dump the shares on the market all at once,' [Harding] said. 'I would assume that all of the investors that hold the 270 million-odd shares are probably rational, and probably realize that flooding the market with that kind of supply over such a short amount of time wouldn’t help their position.'" By contrast with Mark Harding, the analyst at JMP Securities LLC quoted in the article, I would keep in mind the old saying "The market can remain irrational longer than you can remain solvent," and be very concerned about other investors looking out for Number One and thus depressing the price of Facebook stock for all other holders of Facebook stock. Over the next several weeks or months, those of us who are looking on (I don't own any Facebook stock) will see what the various investors decide. Thus far, all the trading activity seems to agree in general that Facebook shares will not recover their IPO price any time soon.
  • ojbyrne 14y ago
    One could argue that holding the stock and waiting for it to come back up is the irrational response - cutting your loss seems rational to me.
    • lmm 14y ago
      There's pretty much guaranteed to be a temporary dip, because there will be some people who own facebook stock that just came out of lockup and need to sell at any price (perhaps they've just got divorced or something). Holding on for at least a couple of days until the market settles down is the rational move for everyone except those few who absolutely have to sell now.
  • smnl 14y ago
    Many large asset managers have mandates to sell their losers and cut losses, or may be window dressing before the end of the quarter and don't want to show to clients that they hold any FB stock on their book. So that may be contributing to the selloff today
• tcbawo 14y ago
  Not to be a conspiracy theorist, but if The Street knows that large blocks are going on sale, this would be an optimal price to run down the price.
  • lorenzfx 14y ago
    I interpret the article in a way that these stocks CAN be sold from today on but don't have to.
  • tatsuke95 14y ago
    And how do you propose they run down the price? Someone needs to be buying on the other end, and there are a shortage of those. That's why the price sinks. Besides, the Street made their money off of this deal a long time ago.
    • Irishsteve 14y ago
      They can make more. They like more :-)
• fkdjs 14y ago
  ...and it tanks again. Many facebook employees purchased houses using facebook stock. That is, they didn't have enough income to qualify for a loan, but they showed their facebook stock + current market price(pre-ipo), and got approved that way. So one bubble(FB), inflated another bubble(housing), and it's all deflating before our eyes. The fact that facebook employees are tanking/will tank this stock further should tell you something. I believe the employees start selling en masse in October, so this is just the warmup. I'm betting we'll see $12.
  • localhost3000 14y ago
    never considered that. is this true? were banks giving mortgages using stock as collateral / proof of credit-worthiness? how widespread is this?
    • tatsuke95 14y ago
      Sounds bit of an odd practice to me, since a mortgage is such a straight-forward, easy-to-get loan that the Mexican landscaper can get one even though he doesn't live in the country. But I believe it. Shares in a company are real assets, and this is the Valley. Interesting story.
      • melvinmt 14y ago
        Mexican landscapers can't buy multi-million dollar homes (assuming that's the range we're talking about here). Other than that, can't really feel sorry for hurt millionaires, it sucks for them, but there are more pressing problems in the world to worry about.
    • retube 14y ago
      actually pretty common for high net worth individuals. If you earn 300k a year but have stock worth $10m then yeah banks will lend you way, way above what your income alone would support (ot at least they did prior to the credit crisis. One of the lehman bosses had loans of nearly 50m collaterised with his stock... which went to zero)
  • 14y ago
• jtbigwoo 14y ago
  It's funny that all these analyst can talk about such vague suggestions when it seems clear that different investors have clear motivations here. It's perfectly reasonable for Microsoft to hold on to their shares--even if facebook goes broke they still have billions in cash. Thiel will probably sell part of his stake--you don't hang on to 1.5 billion by being overly concentrated in any one area. Other investors (VC's and funds) will almost certainly sell most or all of their stakes. There's no expectation of 10x or 5x returns anymore and a fair amount of downside risk. I expect 90% of individuals with stock options to sell as they can. If I have a choice between selling at $20 now and getting, say, $200,000 or waiting some unspecified time and possibly getting more (or nothing), I'm going for the sure money every time. Even for someone whose pay is in the low six figures, option money like this can mean paying for your kids' college education or starting your own business. The only ones who might hold on would be those who don't have many shares/options (I'm thinking less than 2,000).
  • jpdoctor 14y ago
    > It's perfectly reasonable for Microsoft to hold on to their shares--even if facebook goes broke they still have billions in cash. Common shareholders are last in line when a company goes broke.
    • tedunangst 14y ago
      Microsoft has billions in cash.
  • roc 14y ago
    Beyond the strict money value of those shares, Microsoft gains business value from being a large and influential investor in Facebook. That can make up for quite a bit of strictly monetary opportunity cost.
  • duaneb 14y ago
    > I expect 90% of individuals with stock options to sell as they can. If I have a choice between selling at $20 now and getting, say, $200,000 or waiting some unspecified time and possibly getting more (or nothing), I'm going for the sure money every time. Even for someone whose pay is in the low six figures, option money like this can mean paying for your kids' college education or starting your own business. The only ones who might hold on would be those who don't have many shares/options (I'm thinking less than 2,000). I think there's still a lot of energy/optimism at Facebook inside its own Reality Distortion Field. Even if Facebook doesn't recoup its value for years, there's still a lot of money to be bad. Remember that not everyone makes the same decisions you do.
• spaghetti 14y ago
  I've always been curious about trading options. It seems like now is a good time to buy the FB120818P00017000 put for example. I honestly don't see the downside to this. That option is trading at $4 for a block of 100. So investing $400 get's you 10000 options. If the price of the stock dips below $17 the option could trade at 48 cents in which case you've turned $400 into $2400 (minus transaction fees and taxes). On the other hand you could lose your $400 which isn't that bad. What's are the downsides here that I'm missing?
  • cschneid 14y ago
    Downside is obviously the 100% loss you'd take on the $400. Assumption you're making: That FB is overvalued currently, and has 15% to fall (it's at 20 now, and you are saying it will go down by $3 by the 18th [tomorrow!!!]) I'm not sure where that $0.48 is coming from in your comment. At expiration (when an option has no time value), a put should be worth StrikePrice - StockPrice. So if Strike is $17, and stock is... say... $15, the option will be worth $2 ($200 since each option actually controls 100 shares). That math changes with the stock price, so I'm not sure what you're talkinga bout with $0.48... Also note that spreads at the low end of options will eat you alive. Specifically you should expect to pay upwards of $10 or even $15 to get anybody to fill you on those options. The $4 amount is highly unlikely to get filled, especially at the qty you are talking about. Basically, this is a bad idea, and will just lose you $400.
    • chucknelson 14y ago
      After reading this, it seems like way too much complexity exists in the market. Me and my naive thoughts of "it's just simple buying and selling, right?" How long has it been like this?
      • lmm 14y ago
        Since the mid 17th century. It's still perfectly possible to be a fundamentals trader/value investor and make a decent income. Look for undervalued companies or those everyone is selling, buy their stocks, hold them for the long term and be prepared for a bit of up and down. But there people who want to buy and sell these complex derivative contracts (well actually an option is pretty much the simplest derivative contract there is), and so the market will join them up with each other.
• Lasher 14y ago
  These are not new "dilutive" shares - the stock was always factored into the FB market cap so it's not like publicly traded shares are suddenly worth 60% less just because the float increases. But it does mean that for a while people who have been unable to sell are able to do so which is going to lead to some short term downward pressure. Once that is over Facebook will resume its normally trajectory, ummm, downward...
• omi 14y ago
  MS and other underwriters destroyed over 50B in capital in last 3 big IPOs. This is economic terrorism.
• scarmig 14y ago
  How did Facebook's IPO go so badly? (It's generally agreed upon that it went horrifically for Facebook and its shareholders, right?) Is it, in a very stylized way, Wall Street in just wanting to extract as much money as possible from a target and not really serving the interests of the client? If so... how can that market be disrupted?
  • calciphus 14y ago
    It went badly because a few groups had tried to inflate the stock for its IPO, and as soon as folks got their hands on financials that became apparent. Without a revenue plan and saddled with immense costs, that company is generally not fiscally healthy, certainly not enough to justify 100x valuation over annual profits.
  • duaneb 14y ago
    People had unreasonable expectations because it was one of those Big Silicon Valley IPOs, which have traditionally paid off very well. I suspect that most people thought (without evidence) that Facebook had some magic revenue device up their sleeves. Perhaps Facebook also thought they would be given more time to produce on the investment.
  • dchuk 14y ago
    A company's customers determine its value. Facebook's customers are advertisers, not stock purchasers. Advertisers have valued them at a few billion dollars. The stock purchasers put that value at over $100bn. For some reason, people took the stock purchaser's word over the actual customer's word.