As many as 271 million shares of Facebook (FB) could potentially hit the market today as the company's insider lockup period expires. It's the first of a series of expirations that could result in almost 2-billion shares being released to the public over the next two years.
Facebook currently has 420 million shares in the public markets. With a lack of demand having already cut FB shares almost in half, the prospect of more supply is horrifying to those hearty few that are still long. Breakout spoke to Jon Najarian of OptionMonster.com about the implications of the release of additional shares. [Note: Najarian has a long position in FB]
"The single biggest thing it might do is make it less expensive to be short Facebook," Najarian says to the likely horror of the bulls. He's referring to how much brokerages charge customers to execute a short. For a company like IBM (IBM), with a massive float and little zealous shorting, the price to borrow is low. For companies with relatively low floats and horrendous prospects, being a bear gets more expensive.
For companies like Groupon (GRPN) and Yelp (YELP) where the floats are small and prospects viewed as dim, Najarian says getting a borrow can cost as much as half the face value of the stock itself. At such a price the stock would have to drop 50% before the bear make,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
Facebook, Inc. (FB)
-NasdaqGS
20.02 Down 1.18(5.57%)
Volume: 42,691,078 30 minutes of trading LOL, ALGOS going wild and having field day!!!!!!!!!!!!!!!
http://finance.yahoo.com/blogs/breakout/facebook-shares-plunge-insider-lockup-expires-132245168.html?l=1
Realist - Everybody in America is soft, and hates conflict. The cure for this, both in politics and social life, is the same -- hardihood. Give them raw truth.
| 