Facebook stated in a Securities and Exchange Commission filing late Tuesday that its co-founder and CEO has no plan to sell any of his stock for at least the next 12 months. The announcement comes as part of an effort to restore investor confidence in a company whose share value has nosedived since going public just over three months ago.
Shares went for $38 apiece when Facebook hit the stock exchange on May 17, but after peaking at about $45 on the first day of trading it’s been downhill all the way. On Tuesday they hit a new low of just $17.55.
Zuckerberg is Facebook’s largest stakeholder, with more than 500 million shares in the company. Immediately after going public, he sold a bunch of shares to take care of a tax bill, but this week has vowed to hold on to his stake for the next year.
This comes after recent news that other big investors had sold part of their stakes in the social networking giant. Last month early investor Peter Thiel unloaded the majority of his shares – about 20 million of a total of 25 million – followed a couple of days later by Facebook co-founder Dustin Moskovitz, who sold a much smaller amount.
A tiered lock-up system prevents all shares in the company from becoming eligible for trading at the same time. Thiel and Moskovitz traded theirs almost the moment their lock-up periods expired. Zuckerberg can trade his shares on or after October 29, although he has now pledged not to do so.
Whether his announcement is enough to settle the nerves of Facebook investors remains to be seen.
The coming months will be crucial for the company’s share price. In October, the social networking giant will release its next set of financial results, and between now and November more lock-up dates will expire, clearing the way for the potential sale of nearly 2 billion shares. In November alone, a further 1.2 billion shares will become eligible for sale.
For an in-depth look at Facebook’s bumpy ride on the stock exchange, check out this piece by DT’s Geoff Duncan.