Facebook says CEO won't sell stock for 1 year
Facebook's stock got some reprieve in after-hours trading done on Tuesday after the company said its CEO, Mark Zuckerberg, won't sell stock in the company for at least the next 12 months.business Updated: Sep 05, 2012 07:16 IST
Facebook's stock got some reprieve in after-hours trading done on Tuesday after the company said its CEO, Mark Zuckerberg, won't sell stock in the company for at least the next 12 months.
Investors have been concerned with the expiration of lockup periods that allow insiders to sell stock in Facebook. If a lot of shares flood the market the stock price may fall. Adding to those worries, Peter Thiel, a board member and Facebook's earliest big investor, has shed most of his holdings in the Menlo Park, California-based company.
In the Tuesday regulatory filing, Facebook allayed some of those fears. In addition to its disclosure about Zuckerberg's plans, it said that two of its board members, Marc Andreessen and Donald Graham, plan to sell shares to cover taxes, but have no "present intention" to sell any additional stock.
Earlier in the day the social media company's stock fell to its lowest point since its initial public offering after an analyst for the bank that orchestrated its IPO cut his target price on the stock to $32 from $38 saying that its mobile advertising revenue is just starting to grow. The latter was Facebook's IPO price - the one it hasn't hit since its first day of trading on May 18.
Morgan Stanley analyst Scott Devitt still has an "Overweight" rating on Facebook stock. Doug Anmuth, an analyst at JPMorgan, which was another large underwriter of the offering, also cut his target price on Tuesday, to $30 from $45. He kept an "Overweight" rating as well.
Facebook's stock fell to $17.55 in Tuesday trading, its lowest point ever, and closed down 33 cents at $17.73. That's less than half of the stock's initial public offering price of $38. It climbed 31 cents, or 1.8%, to $18.04 in after-hours trading following the disclosure that Zuckerberg will hold off on selling.
Facebook also said that it plans to report its third-quarter earnings on Oct. 23.