NEW YORK (AP) — Facebook's stock is up more than 7 percent despite expectations that it would fall because more than 850 million additional shares in the company are being freed up for sale.
Shares of Facebook Inc. are up $1.48, or 7.5 percent, at $21.34. Facebook went public in May at $38 in a much-hyped initial public offering of stock that turned out to be a letdown for investors. Its stock price hasn't hit $38 since.
Wednesday marked the expiration of Facebook's biggest lock-up period, which is a time following an IPO that prevents insiders from selling stock. In all, 773 million shares became eligible for sale, along with 31 million restricted stock units. And about 48 million shares held by former Facebook employees also became eligible for sale, bringing the total to 852 million. These shares would be on top of what's already been available for trading, increasing the supply and potentially lowering the overall price.
Lock-ups are common after initial public stock offerings and are designed to prevent a stock from experiencing the kind of volatility that might occur if too many shareholders decide to sell all at once.