Free from its long line of lockup expirations,
shares are flourishing like never before.
The social network's stock is up another 1% today, moving
above $26 a share for the first time since late July. Facebook
shares have gained an incredible 33% in the last two weeks alone
- the biggest move in the stock's short, mostly troubled
The root of Facebook's latest move can clearly be traced to
November 14. That was the day its last set of lockup agreements -
contracts that prevent major investors in an IPO from selling
their shares for a designated period of time - expired.
From August to November, nearly 2 billion Facebook shares
became eligible for lockup release. During those three months,
the stock remained stagnant. Every time it managed to gain some
ground, another round of scheduled lockup releases would arrive
and knock the shares back a peg or two.
Now that all the lockup release periods are over, there are
fewer sudden mass sell-offs of Facebook shares.
wrote two weeks ago
, even the early investors whose 800 million combined shares
became eligible for lockup release on November 14 didn't sell.
The stock rose 13% that day - a stark contrast to past lockup
expiration days. That was a telltale sign that the Facebook tide
had turned, and that investors were now buying shares instead of
This run won't last forever. The recent rally has pushed
shares to seemingly unsustainable levels at 136 times earnings -
even more expensive than the 104 times earnings the stock was
trading for after its ill-fated IPO back in May.
has insisted that the stock is worth no more than
$20 a share
However, now that it's no longer burdened by lockup releases,
Facebook's stock has a certain freedom that it never had before.
It's free to move as high as investors are willing to take