Washington, Nov. 14 (ANI): Social networking giant Facebook is set to face yet another day when millions of shares could hit the market, and this may possibly be the biggest potential stock dump so far.
Early employees and investors will get their first chance to sell about 773 million shares, as well as another 31 million restricted stock units owned by employees who joined the social site prior to 2011.
Like many initial public offerings, Facebook's May 18 debut included a "lockup" agreement that requires some shareholders not sell their stocks for a certain period, CNN reports.
According to the report, lockups, which typically last 90 to 180 days, are designed to prevent the market from being swamped with too many of a company's shares immediately after an IPO, as keeping the amount of stock scarce can help boost the price.
However, this scarcity hasn't helped Facebook, who have lost nearly half their value since they debuted at 38 dollars. The stock was down about 1 percent in early trading Tuesday, following a 4.6 percent jump on Monday last week, the report said.
Facebook has already made it through several lockup expiration periods. The company employs a somewhat unusual staggered system, with a total of five lockup expirations. Wednesday is the third and possibly the largest in the series.
The first came in August, when early investors were able to sell more than 270 million shares and the stock promptly fell 6 percent. Some of those sellers included Peter Thiel, the company's first big investor, as well as co-founder Dustin Moskovitz, the report added. (ANI)