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Facebook (FB) Surprise: Stock Soars Despite Lockup Releases

More than 800 million shares of Facebook (NASDAQ: FB) are eligible for sale today after another round of lockup releases.

So far, however, there has been no mass sell-off. In fact, the stock is having its best day in nearly a month.

As of noon eastern time, Facebook shares were up 9% today, rising as high as 10% earlier in the morning. That’s in stark contrast to past lockup expiration days.

“Lockups” are agreements that prevent major investors in a given IPO – usually company executives and venture capitalists – from selling their shares until a certain amount of time elapses after the company goes public. Lockup agreements last anywhere from 90 to 180 days, at which point early investors are “released” from their obligations.

When the first wave of lockup releases occurred in mid-August – when 400,000 Facebook shares became eligible for release three months after the company’s IPO – the stock plummeted 11%.

Last month, another 234 million Facebook shares were freed from their lockup obligations, and the stock sank another 3%.

So today’s big gains are a major reversal – and a good sign for the stock going forward. Today marked the last – and largest – wave of lockup releases. All told, 1.85 billion Facebook shares have become eligible for sale over the past three months courtesy of lockup expirations.

Despite a few short-term setbacks, Facebook has managed to weather the lockup-release relatively unscathed. When the first set of lockup agreements expired on August 15, the stock was trading at $21.20 a share. After this morning’s move, the stock is currently trading at $21.60 a share.

Suddenly, early Facebook shareholders aren’t so eager to sell off their shares. Perhaps it’s a sign of things to come. 

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