FB = MYSPACE 2.0 x 100 , Upcoming problems

BATS:FB   Facebook, Inc
Read this in an article this morning, about upcoming problems for Facebook
- Lock-up releases will likely lead to hundreds of millions of new shares being dumped on the market over the next six months ... and Facebook can no longer do a simple "follow-on offering" to manage this process.

- Facebook faces a massive ~$3 billion tax bill related to its employee stock compensation and can no longer do what it planned to do, which was sell shares to raise this cash.

- Facebook employees now have less incentive to stay at the company than they did prior to the IPO, which may make retention more difficult and expensive.


August 15th, 2012 (next Thursday): 268 million shares, 10% of shares outstanding.
October 14th: 249 million shares, 9% of shares outstanding.
November 13th: 1.332 billion shares, 49% of shares outstanding.
December 13th: 124 million shares, 5% of shares outstanding.
May 17th, 2013: 47 million shares, 2% of shares outstanding.

So yeah, this stock is pretty much screwed


UPDATE : FB LOCK RELEASE : This Wednesday, NOV 14, 777 millions ( not 1.332 billions as stated in my first posted)shares of FB will be released. Meaning former employees, current employees, and early investors will be able to sell. you 've been warned.
Facebook will withhold 101 million shares of stock (for tax witholdings) out of a total of 234 million shares that are owed to employees on October 25.

Basically people, Facebook is doing a buyback of approx $2 billion. Interesting.

See SEC filing right here :
Thank you for the update and link.
So Peter Thiel decided to unload a majority of his stake in FB, so why the hell should you hold to this thing ?
I'm learning something everyday Tim, thank you for the information and feedback :)
timwest Algokid
We all can learn from each other. Your tenacity will serve you well. When FB was priced at a valuation of $100 billion, it was certainly a hefty price to pay (compared to other global brand franchises you could have bought with $100 billion). But at $50 billion mkt cap, at least FB is coming down to a price level where people can more likely find a sense of valuation. More stock in the public float also increases the attractiveness for mutual funds which require a deeper public float in order to buy shares. Since mutual funds were some of the main culprits of the IPO mania in the late 1990's and their swift after-market buy orders could chase an extremely limited number of shares up into the stratosphere, they have changed their rules so that they no longer participate in the IPO "game". FB will be analyzed for a long time. There never is a "right" answer. Only "yes" or "no" to whether you buy or sell at the latest price. Cheers. Tim
Algo kid, every IPO has this same issue, for future reference. I've been involved in IPO's for over 20 years. I thank you for opening up the data and revealing it to our fellow traders. The oddest part of this IPO is that the common shares are not the usual common shares and there is no board of directors, so there is really not the same corporate structure which has served America so well for so long. I imagine that Linked-In will provide a better web valuation yardstick than FB. As for true value, I love Craigslist for getting rid of junk I don't want and for buying great stuff at LOW, LOW prices.

As a side-note. The way I see it, FB and GOOG might have a lot in common for the mere fact that they peer into everyone's life and searches reveal a lot about future behavior and popular trends.

I hope you shorted FB prior to now too and made some good money. Cheers and keep the good ideas coming. Tim