Facebook shares hit an all-time low in early trading today as the lock-out period ended for inside investors, freeing them to offload 270 million shares.
The lock-out period, when inside investors are forbidden from trading their shares to give a recently public company a headstart, finished today, increasing the available shares in the social media firm by nearly two-thirds.
At one point, Facebook stock was valued at $19.71, down 7 per cent, an all-time low and close to half the IPO price of $38.
A big sell-off of the insider stocks could be a disaster for Facebook, whose shares are already suffering from investors' doubts over whether it can make money out of mobile users, the fastest growing area of its business. The social network also had a botched IPO day that was so bad it spawned lawsuits against the NASDAQ and its luck hasn't changed since.
With the stock already down over 40 per cent since it opened on 18 May, investors are torn between offloading their shares before the insiders send the price plummeting and hanging in there to see if they still believe in the network.
The end of lock-up periods is always a big event for newly public firms, but Facebook's uninspiring second quarter results could make it bad one for the network.
The 270 million stocks today aren't even the only Facebook shares coming out of lockdown this year: there'll be another 247 million on 16 October and whopping 1.2 billion freed for sale on 15 November.
However, the inside investors are usually big boys and girls, who hold their nerve a bit better than private investors. They are also likely to make a big loss if they sell at today's prices, given that they bought their shares when everyone was panting for Facebook stock back in 2011 and the beginning of this year, before the actual IPO. ®