Facebook Faces More Woes

As the lock-up period of expires, Facebook is facing more challenges. Yesterday, its shares fell close to four percent.

The company has also allowed its pioneer employees to sell about 230 million shares. According to documents, Facebook waived one provision, which prevented its employees from selling their shares until Nov. 14.

This means that about US$5 billion of shares would be for sale. Hurricane Sandy, however, hit the East Coast of the United States and led to the two-day market closure.

The lock-up provision is implemented for companies that made the transition to IPO to prevent insider trading. Facebook’s lock-up period would take effect Nov. 14.

According to a Wedbush Securities analyst, it’s a surprise why Facebook allowed waiving the provision. Michael Pachter said he does not understand why the company chose to unlock its compensation in the first year of its initial public offering.

About one million shares held by employees are expected to become available by the end of the year. Facebook founder Mark Zuckerberg is not unloading his shares before September 2013. Early Facebook investor Peter Thiel, however, has unloaded his shares last August.

Facebook continues to struggle with its stock price as Walk Street keeps an eye out on the company and its ability to make money.