I shorted FB ahead of news that its restricted stock options would vest today, which would lead to tons of insider selling from disgruntled employees who saw the value of their stock fall over 40% since FB's IPO. Why wasn't today's sell-off already priced in? I second-guessed myself during the weekend and figured that Wall Street already had any foreseeable sell-off priced in, but now this happens..
More interestingly, today, only 234 million shares were added to FB's initial float of 692 million. Another 777 million shares will vest on November 14th.
Do you people in trading/AM think there will be another shorting opportunity prior to that date or was my gain today just luck (i.e., simply more shareholders sold stock than anticipated)?
Just wondering wtf is going on here...
I'm in a trading game and I ended up shorting FB a couple days before it shot up recently (for the same reason you're shorting it)... Still haven't recovered from it, but it has been going down since then. I didn't even know that FB started putting ads on their mobile app ha. It was basically just speculation on my part.
It's going lower..Get in on some put action. Solid gains since their unreasonable bump. The liquidation that is about to occur will lead it lower.
If you look at the day FB popped, it jumped 24% and 104M shares were sold negating 4% of the total gain, people want to cash out and anything above 20 will encourage them too do so.
Sorry but the lock-up expiration is not 'news.'
Stop playing the short-term trading game and learn how to value a business.
I think facebook is a lot like ethanol - probably net destructive to the overall wellbeing of the economy when you account for the productivity costs. Facebook is a succubus that destroys the productivity of so many other better organizations at very little gain. Would love to see research on Facebook's net impact on US GDP.
That aside, I think it's going to be tricky to short accurately based on the vesting alone. Employees sure are disgruntled, but everyone knows that, no? What's your approach for predicting whether they will be more or less disgruntled in their selling than the status quo disgruntledness? Not being facetious, I just want to know if there is actually any rationale (e.g. maybe you've talked with a company employee about the vibe/talk in the office, etc.).
Good luck!
@frgna Well, the stock recently shot up about 20%, which I thought was pretty generous for a company that just reported another loss and was clearly going to report higher Q3 revenue because of mobile ads. I then read about the hurricane, which I figured would shed about .5% from stocks in aggregate (basic market psychology) and about the vesting options, which I thought would simply flood the market and bid the stock down a few percentage points because not enough buyers would be stepping in.. That's basically what I had in mind.
As for employees being more or less anxious to sell, I don't think there would have been a way to accurately gauge that without surveying a large sample.
It's a simply prisoner's dilemma..Yes, FB employee's will be better off if everyone held their shares. However, if some employee's start selling their shares others will follow to avoid missing the boat, resulting in a nash equilibrium where everyone just cuts their losses.
@Sean518 Good point.. Never thought of it that way
Hahaha that's not a prisoner's dilemma nor a nash equilibrium. That type of scenario more closely resembles a Gresham's dynamic
Shorted as well. Hooray.
I told my PM to short at $25 but we don't play the speculation game here so we didn't. The pull-tug action going on is remarkable between LT believers and lock up expired sellers. But all in all, the valuation doesn't make sense and I don't think a lot of those employees are looking 5 years ahead with all the short term shit going on. If i was them I'd sell out as well and take my cash and wait for this election, fiscal cliff, Europe to be resolved.
coming home to papa...FB 2014 puts @15...it may not drop with the lockup, it may not drop with the next earnings release, but I think it WILL drop by mid next year (latest) into the mid teens...
which broker do you use btw?
Doubled down at $1.40... those things are golden.
what's your expiry?
jan 2014
It will be interesting to bring back this post and the other one from 2 weeks ago on november 14-7th
who's playing lockup expiration tonight?
got absolutely burned the last time i tried this with $yelp.
....here we gooooooooo. I'm not sure people realize the SIZE of this lockup expiring.
Note: I'll go long if it hits $12
doesn't most of it belong to the zuck who said he's not selling tho?
"Mr. Zuckerberg currently holds in aggregate approximately 444 million shares of Class B common stock as well as 60 million shares of Class B common stoc"
FACEBOOK LOCK-UP RELEASES: 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. Over the next 4 months, in other words, 2 billion Facebook shares will become eligible for sale—about 70% of Facebook's total shares outstanding.
So Zuck owns a lot, but the wave getting unlocked at the end of today is still pretty massive....
Someone is excited!!!
Cue pic of Mr. Burns bringing finger tips together
Alright Paddy I just built a small position in Dec 20p's. Que sera sera.
Don't think the drop is going to be proportional to the drop that came from the last lockup, but should still be significant. Not something I'd play as a one day thing but I guess you could.
If there's something that we've learned from the tech bubble, it's that these internet companies have few, if any, real assets. FB is highly speculative. If they miss any earnings by a small margin, the stock will plummet. I shorted it the week after the IPO, when coincidentally the wealth management firm I was interning at had gotten their hands on pre-IPO shares and were highly bullish.
I'm pretty bullish on FB overall. But I think most people are which gives it a huge potential upside if they can turn this sentiment around.
Look at that volume. Something's up with institutional buyers.
Some crazy shit has been going on in the market since Monday (regarding FB). It almost seems rigged. Anyway, the stock better plummet in 10 minutes.
It is rigged. Leave it alone til the open.
I am sure institutional buyers are going to do their best to supoprt the stock (has already been happening) since they are already so exposed. That's why you see so much volume...they are trying to keep it above $20.
it was pinned at 20 late yesterday. looks like the same this morning.
let's go boys.
big pop on open....up ~6%
And this is why I don't understand finance... I'm lucky I'm shorting it on a simulation account ha
....now watch it turn over :-)
it's the guys who wrote puts....
there are solid buyers here. L2 is nuts.
guy on CNBC just said that some institutions are having trouble selling because paperwork is complex.
So... that happened.
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