Employee Dump Day Could Sink Facebook Stock

Market could soon be flooded with shares

By Kevin Spak,  Newser Staff

Posted Oct 26, 2012 2:30 PM CDT

(Newser) – Facebook's beleaguered stock price got a reprieve this week after some positive earnings results, but the good times might not last. On Monday, current and former Facebook employees will have their first chance to sell their shares, meaning more than 230 million more shares will suddenly be available, USA Today points out. If enough Facebook employees sell, it could flood the market—and worse, indicate that Facebook's own employees doubt its value.

And Monday's just the first salvo. Another 777 million shares will unlock on Nov. 14. Together, these two bursts of stock will account for about half of all outstanding Facebook shares. "I would imagine that half of that stock will get sold," one analyst tells CNBC. "I think a lot of people will step in [to absorb demand], but I suspect the stock will drop 10% or so lower."

In this Friday, May 18, 2012 file photo, electronic screens show the price of Facebook shares after they began trading in New York.
In this Friday, May 18, 2012 file photo, electronic screens show the price of Facebook shares after they began trading in New York.   (AP Photo/Richard Drew, File)
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