Well, this was predictable.
For weeks now, pundits, stock analysts and the media have been warning that Facebook shares -- already under pressure for a variety of reasons -- would face a fresh challenge when so-called "lockups" expire, allowinginsiders holding pre-IPO shares to start selling them.
And that's exactly what happened today, doubtless bringing joy to the many short sellers who bet on the stock to fall.
Today's "lockup" expiration was relatively small, with insiders now free to sell 271 million shares, adding to the 421 million already in circulation. Yet it was enough to do damage. On a day when the Nasdaq rose more than one percent, Facebook fell more than six percent to close at a record low of $19.87. (For those keeping score, that makes the still-not-approved Instagram acquisition, celebrated for its $1 billion price tag in April, now worth $757 million.)
No word yet on which insiders might have dumped their stock today, but it seems likely that some did considering that the day's trading volume was among the highest ever for Facebook.
Over the next nine months, more than 2 billion additional shares could hit the market as more "lockups" expire. The big one lurking hits on Nov. 14, when insiders will be free to sell 1.32 billion shares. The stock is now almost 48 percent of its offering price of $38.