Ahead of the Bell: Facebook lock-up expiration

Associated Press

NEW YORK (AP) — Facebook's employees will be able to start selling restricted stock in the company starting Wednesday, potentially flooding the market with additional shares and driving prices down.

The so-called lock-up period expired Monday while the stock market was closed for bad weather on the East Coast. Lock-ups are designed to prevent a stock from experiencing the kind of volatility that might occur if too many shareholders decide to sell a newly traded stock all at once.

Facebook's early investors and a handful of directors became eligible to sell additional stock in August. The second lock-up period expired Monday. The market could be flooded with up to 234 million additional shares and stock options held by employees as of Oct. 15, though CEO Mark Zuckerberg won't be one of them. He's already said that he won't be selling stock until at least next September.

Facebook's stock hasn't done well since its initial public stock offering in May amid concerns about its ability to keep growing revenue. However, it did see its biggest one-day gain last Wednesday. Several analysts upgraded the social network after its third-quarter results were posted Oct. 23, which detailed for the first time how much money it makes from mobile ads. Mobile had been a concern since before the company's IPO.

There are other lock-up expirations coming up:

— Nov. 14: 777 million shares and stock options. Zuckerberg had been eligible to sell his shares at this date, but Facebook has changed that given that the CEO had no plans to do so.

— Dec. 14: 156 million shares held by early investors and others who participated in IPO, except Zuckerberg.

— May 18, 2013: 47 million shares held by the Russian Internet company Mail.ru Group and DST Global, both of which made early investments in Facebook.

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