FACEBOOK is braced for a major test of confidence today when millions of new shares in the company flood the market, opening the possibility of its shares dropping after recent gains.
Today is the first time that many Facebook employees will see shares freed up after the company went public in May. It is the second wave of new shares to hit the market after the first tranche was released on 16 August, when the company’s stock fell as much as seven per cent.
However, the effect of today’s unlocked shares could be more severe, since many of them are owned by Facebook employees looking to cash in, rather than by early investors. Some 249m shares will enter the market, increasing the pool by around a third.
The end of this lock-up period was originally set for two weeks ago, but was postponed until today so that shareholders could make sense of Facebook’s latest earnings report, which was released last Tuesday.
It showed that the company may have turned a corner with regards to making money on mobile phones, which users are increasingly accessing Facebook from. It now makes 15 per cent of its advertising income from mobile adverts. Last week’s results sent shares up 24 per cent.