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
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!Originally Posted by 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
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.
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