Facebook (NASDAQ:FB) stock did a pleasant about-face last week, shooting up roughly 25% after announcing earnings, where the company showed it was getting traction in monetizing its mobile traffic.
Since, then, though, the selling pressure has returned, exaggerated today via a roughly 4% decline following another lockup expiration for FB shares.
In the latest expiration, 234 million shares became eligible for sale. Some of those shares apparently hitting the market, as today’s volume (as of 11 a.m.) already is above FB’s daily average of 51.8 million shares.
Now, this type of action is normal — after all, a big part of the compensation for Facebook employees is stock, and it ain’t cheap living in Silicon Valley. So robust selling reasonably should have been expected.
However, these single-day dangers aren’t over yet. Facebook has another lockup expiration coming up on Nov. 14, and that time, a whopping 804 million shares could be dumped into the market.
In light of this, expect a cap on the stock price, at least for the next few months.
Tom Taulli runs the InvestorPlace blog
IPOPlaybook, a site dedicated to the hottest news and rumors about initial public offerings. He is also the author of “How to Create the Next Facebook.” Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.