Facebook's stock plunged below $20 Thursday after the
expiration of a ban that had prevented some early investors and insiders from dumping millions of additional shares they own in the social-networking leader.
Firms ranging from Accel Partners to Goldman Sachs, Zynga CEO Mark Pincus and Facebook board members James Breyer, Peter Thiel and Reid Hoffman were among those free to sell stock they own, after the lifting of a ban known as a lock-up period. If many of them took advantage of that, Facebook's stock could decline because the market would be flooded with nearly two-thirds more shares.
It's not yet known whether any of those investors had sold any shares. The stock price decline could have reflected investors' anticipation of such a move.
Facebook Inc.'s stock traded as low as $19.69 before bouncing back to $20.14 in afternoon trading Thursday. That's still down 5 per cent, or $1.06, from Wednesday's close and about 47 per cent below its initial public offering price of $38.
If the stock hits $19, it will have lost half its value since Facebook went public in May.
By 1:30 p.m. EDT (1730 GMT), nearly 120 million shares had traded - nearly four times the average volume on a full day.
Venture capitalists who invested in Facebook as early as 2005 were likely eager to sell at the earliest opportunity. Though it's trading at about half of its IPO price, Facebook's stock is still very expensive, said Sam Hamadeh, the CEO of PrivCo, which researches privately held companies.
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