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Facebook shares soar 10% as major 'lock-up' ends

November 14, 2012|By Andrew Tangel
  • Facebook is welcomed outside Nasdaq's headquarters at Times Square in New York.
Facebook is welcomed outside Nasdaq's headquarters at Times Square… (Carolyn Cole / Los Angeles…)

To sell or to hold?

That's a question confronting Facebook insiders and early investors as they become eligible Wednesday to sell 804 million shares, nearly doubling the amount of the company's stock up for trading on the public market.

A lock-up period's end Wednesday could increase pressure on Facebook stock, which has languished far below its initial public offering price of $38.

But so far, Facebook stock has soared. The company's shares added $2.04, or 10%, to $21.90 in early trading Wednesday.

Major U.S. indexes, meanwhile, edged higher. The Dow Jones industrial average gained six points, or 0.1%, to 2,762. The broader Standard & Poor's 500 index was up less than a point, essentially unchanged at 1,375. The Nasdaq was up nine points, or 0.3%, to 2,892.

Brian Wieser, an analyst at Pivotal Research Group, predicted in a note that only about 487 million shares would come onto the market.

Not every investor would want to sell immediately on the lock-up period's end, Wieser said. And even with a large volume of selling, institutional investors probably would step in to buy, he said.

"While the number of shares is significant, the market should be capable of handling the trading that results from the lock-up expirations," Wieser wrote.

Two more lock-up periods loom on the horizon. On Dec. 14, 156 million shares will become eligible for sale. On May 18, another 47 million shares could go on the market.

Facebook shares made their stock market debut May 18.

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