Yesterday, we warned you of a potential “flash flood” for shares of Facebook (NASDAQ:FB) — and that flash flood is exactly what happened.
This morning, the first tier lock-up of the company expired, meaning that 271 million shares — two-thirds of the total and more than half of the total sold in the IPO — became available for sale. The result? FB dropped to a new all-time low.
The stock fell 7% by mid-morning and hit hit an all-time low of $19.71 before making slight gains. More than 62 million shares were traded an hour into the expiration — more than twice the stock’s average daily volume the past 30 days, The Wall Street Journal reported.
The company’s has lost nearly 50% of its value since the botched May IPO. And this is just the beginning — the company also has other lock-ups expiring in October, November and December.
A long-time follower of the IPO scene, back in 1999 Tom started one of the first sites in the space called WebIPO. It was a place where investors got research as well as access to deals for the dot-com boom. Tom also wrote the top-selling book, Investing in IPOs. In it, he covers all the aspects of analyzing an IPO, such as reading the prospectus, detecting the risk factors and understanding some of the arcane regulations. But don’t worry — if that process is too intimidating for you, thankfully Tom will do the legwork for you right here in the IPO Playbook blog.
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