The “lockup” of shares held by investors who took part in rounds of Facebook Inc.’s (NASDAQ: FB) funding that happened before the firm’s initial public offering will end on August 16. Many current investors are worried that, with as many as 1.6 billion shares about to become tradeable, some of these will be thrown onto the market. Facebook’s daily share volume is just short of 50 million.
The period after the lockup will be a litmus test for how much faith these early shareholders have in the company’s future prospects. Some may believe that a precipitous drop could mean that the market in general sees too many drawbacks to Facebook’s future. If so, they will join the sell-off that has gone on since the first day of the initial public offering.
Douglas A. McIntyre
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