16 Aug 2012
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Insiders eligible to cash in on Facebook

A selection of Facebook insiders are eligible to sell stock they own in the social networking company today, with up to US$1.91bn shares available for sale.

Early investors and a selection of high-profile executives will be entitled to sell stock they own, as the ‘lock-up’ period preventing insiders from unloading shares too close to an IPO expires.

While the industry is not expecting any action on the market, if the $1.91bn shares do flood the exchange it would represent four times the 421m shares currently trading since Facebook’s initial public offering in May.

As reported by the social networking site in a regulatory filing, CEO Mark Zuckerberg is excluded from selling his shares for unspecific reasons – with the founder eligible from mid-November.

Lock-ups are legally binding contracts, prohibiting individuals from selling any shares of stock for a specified period of time to avoid stock experiencing the kind of volatility that could happen if too many shareholders sell a newly traded stock at once.

If too many people sell, however, analysts expect Facebook’s stock price to decline, and with their stock closing at $21.60 on Monday – down 43% from its initial public offering price of $38 – it is a problem the company can ill afford.

If you were eligible would you cash in on Facebook? Tell us your thoughts below.

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