Facebook sees shares tumble again

Published:  17 Aug at 9 AM

Shares in social networking giant Facebook fell sharply at the end of the first lock-up period this week. In New York on Wednesday shares dropped in value from $20.74 to $19.87, a fall of 6.27 per cent. The end of the lock-up period meant that more than 270 million shares could be sold on Thursday.

Lock-ups are put in place to prevent company insiders of a newly floated firm from selling shares which could cause wide fluctuations in prices if too many shares come onto the market at once. Lock-up periods usually last for 90 days after a firm is floated.

The end of the first lock-up period for Facebook means that David Ebersman, the company’s finance chief and Sheryl Sandberg, Facebook’s operating chief can sell their shares. Investors including Accel Partners, Goldman Sachs and Microsoft are also allowed to sell.

Mark Zuckerberg, Facebook’s chief executive, will have to wait until the middle of November if he wants to get rid of any of his stock.

Since floating in May, Facebook has seen the value of its shares nosedive. The company declared a loss of £157 million for the second quarter of the year. Analysts are worried that the social networking site will not be able to attract advertising revenue as more people move from computers to mobile phones to access their profiles.