FB

[Pascal]

It is almost a post for entertainment, as I have never considered FB seriously, but the recent bounce does not seem to be supported by the LEV pattern. We should also not forget that locked-in insiders will soon be free to sell their shares (if I remember well, their cost base is very very low. So any price is an incentive to sell.)

So I believe that if this trend continues, FB could be a short around $31.


Pascal

15193

[Dallas]

We should also not forget that locked-in insiders will soon be free to sell their shares (if I remember well, their cost base is very very low. So any price is an incentive to sell.)

So I believe that if this trend continues, FB could be a short around $31.


Pascal

15193

To elaborate, the numbers I have seen show about 250 MM shares coming out of lockout on 8/16, another 250 MM between Oct. 15 and Nov. 13, and then the big chunk (1.2 Billion shares) on Nov. 14. Mark that date!

[Pascal]

Thank you for posting these figures of locked shares. With a daily volume exchanged of 50 million, 250 million shares would only take five days. However, a selling plan can hardly go beyond 10% of the total daily number of shares, which means that 250 million shares will take a minimum of 50 days to sell.

This basically means that the selling pressure on FB will be quite high for a rather long period.

However, I expect that management will issue some positive news that will allow them to sail through their planned sales in a stock price supportive environment. Will shareholders fall for that?



Pascal

[Dallas]

Thank you for posting these figures of locked shares. With a daily volume exchanged of 50 million, 250 million shares would only take five days. However, a selling plan can hardly go beyond 10% of the total daily number of shares, which means that 250 million shares will take a minimum of 50 days to sell.

This basically means that the selling pressure on FB will be quite high for a rather long period.
Pascal

That's very helpful for perspective.

I plan to watch the action of put options in the outer months of 2012 after Thursday's earnings release to see if hedging activity around the lockout expiration becomes evident. From a speculative viewpoint, an upside surprise on Thursday might make owning Nov. 16 puts a tempting play if EV pattern continues to show weakness in the days following the earnings release. Highly speculative...but tempting.