Facebook falls seven percent as lock-up comes to an end

Facebook Inc’s shares sank as much as 7.1 percent to a record low on Thursday, shedding more than $4 billion of market value after the first of several stock lock-ups that prevented insider sales came to an end.

Thursday’s drop took Facebook’s total loss since its debut in May at $38 to just under 50 percent, or $40 billion.

The stock tumbled 6.2 percent to $19.90 on Nasdaq. It hit a session low of $19.69.

More than 270 million shares have been unlocked – more than one-half of the 421 million shares sold in the May initial public offering of the social networking company.

Roughly 64 million shares of Facebook traded hands in the first hour of trading, more than double its 50-day daily average of just under 30 million shares.

“Pressure will be back on the shares now that liquidity is back in the market,” said Frank Davis, director of sales and trading at LEK Securities in New York. “If (the value of) your holdings has been cut in half, are you going to sit around and risk the rest of that?”

Facebook has been wildly volatile, moving more than 3 percent in most sessions.

Facebook, the world’s No. 1 Internet social network with 955 million users, has seen its shares pummeled since the market debut in May that put its value at more than $100 billion.

Concerns about the company’s slowing revenue growth, and its ability to make money on mobile advertising, have pressured the stock.

Analysts said it wasn’t clear whether the selloff in the stock on Thursday was due to insiders selling shares or to other shareholders selling on concerns about the potential impact from insider selling.

Another 243 million shares will be released from lock-up between mid-October and mid-November. On November 14, more than 1.2 billion shares will be available for trading. Chief Executive Mark Zuckerberg will not be able to sell his shares until then.

“The biggest issue is not this lock-up, it’s the November lock-up,” said Pivotal Research Group analyst Brian Wieser.

If the company’s perceived operating momentum doesn’t improve by then, he said, “then there’s real trouble ahead.”

By Alexei Oreskovic and Ryan Vlastelica

SAN FRANCISCO/NEW YORK (Reuters) – (Editing by Chizu Nomiyama, John Wallace and Jeffrey Benkoe)