) is bracing itself for a sell-off Wednesday when another share
lockup expires. Is this the end of the social network or merely
another speed bump for the Mark Zuckerberg enterprise? The answer
depends on who you ask.
Brian Wieser, an analyst with Pivotal Research Group, told the
that the expiration could lead to a "near-doubling of the float
of freely trading shares."
"We believe only a portion of newly free shares will be sold
in the near-term," he added.
But a "portion" could still amount to a significant loss. When
the last lockup expired, Facebook
dropped five percent
. Shares are trading down less than one percent this afternoon as
investors prepare for the worst.
Facebook currently trades near $20. If the stock declines five
percent tomorrow, the social network stock will drop to $19.
While some investors may scoff at the decline, there is the
chance that Facebook could experience a more significant selloff.
Nearly 800 million shares will be available for trading this
Wednesday -- more than any other period in the company's public
This day has terrified numerous investors. They cannot decide
if they should sell or hold on to the stock for a little longer.
After all, Facebook is now the proud social network with one
billion members worldwide. If Facebook ever figures out how to
properly monetize each of those users, the company could become
one of the most profitable enterprises in the world.
Current shareholders would hate to miss out on that. But they
may be too scared to hold on to their investment. (This is why
experts say that investors should not let their emotions control
or influence their decisions.)
Whatever happens, Wieser is not too worried. "To the extent
volumes do turn out to be heavy, downward pressure on the stock
should be limited," he said, adding that "demand from
institutional investors is likely to emerge if selling proved
heavy at depressed prices." He believes that eager investors are
"likely" to hold off until the stock trades at a more reasonable
"If significant selling did occur, institutional investors who
have otherwise been sitting on the sidelines would initiate
positions," he concluded.
On October 23, shares of Facebook
after the company reported its third-quarter results. The company
continued to rise
the next day, gaining 20 percent.
Wedbush Securities (which maintained its Buy rating and $35
PT) was among the firms to
Facebook's results. Stifel Nicolaus
upgraded the stock from Hold to Buy
, while Jefferies
raised its PT
from $30 to $32.
Investors will be watching closely to see who made the right
(c) 2012 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.