Facebook Shares Suffers Another Dip in Stocks

Social networking giant Facebook has hit another low when its stock dropped below US$20.

Industry observers said that dip may be because of the expiration of a ban, which prevented some of the early investors and partners to sell their additional shares. These include Accel Partners, some Facebook board members, and Zynga chief executive officer Mark Pincus.

When Facebook first listed its IPO, the initial investors were held in a lock-up period and are not allowed to sell the stocks they own. But after the lock-up period has expired, they can now sell the shares if they want to.

And if they take advantage of this and unload their shares, industry analysts said this could cause Facebook’s shares to further drop as the market would have about two-thirds more shares.

The stock market is yet to see this happen because if the investors do sell their shares, they have three more days to declare any sale. According to PrivCo chief executive officer Sam Hamadeh, it is a likely scenario that initial investors would sell.

Hamadeh added that venture capitalists who initially invested in Facebook are also likely to sell their shares. These venture capitalists have pumped in significant amounts as early as 2005.

According to data, Facebook will see a series of lock-up periods reaching its expiration. Industry analysts said the biggest expiration would come in autumn. About 1.91 billion shares would become eligible for selling once all the lock-up periods have expired.