Facebook employees were supposed to be millionaires and billionaires. Instead, they will be half that.
The company's stock fell on Wednesday as many employees got their first chance to sell 234 million shares that had been locked up after Facebook's initial public offering.
The lockup was supposed to expire on Monday, but shareholders could not sell until Wednesday because Wall Street was closed for two days as a result of Hurricane Sandy. Shortly after the markets opened on Wednesday, Facebook stock fell about 4 percent, to $21.04 - nearly 50 percent lower than its original offering price of $38 in May - before recovering a bit. On Friday, the last day of trading for Facebook, the stock closed at $21.94.
The drop suggests that Facebook employees may not patiently wait for the stock to rise and instead were looking for an opportunity to pare back their holdings.
Companies that go public typically compel insiders to hold their stock options for a pe riod of time to prevent the market from being swamped with too many shares. The end of the lockup period, as it is known, can weigh on a stock's value.
In August, 271 million Facebook shares were eligible to be sold. They were held largely by early investors, including Accel Partners and Goldman Sachs. In August, Peter Thiel, a former PayPal co-founder and an early Facebook investor, sold a majority of his Facebook stock, which helped push the stock to a record low.
The next big test for Facebook's stock price will be on Nov. 14, when 777 million more shares held by employees can be sold. Additional lockups expire in mid-December and May 2013.
