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While Facebook Inc. (FB) has rallied three times as fast as the Standard & Poor?s 500 Index since agreeing to buy WhatsApp Inc. in February, it remains to be seen if that will be enough to keep new shareholders from selling.
As many as 178 million shares, or 8.8 percent of Facebook?s outstanding stock, may enter the market as a lockup on stock sold during the acquisition expires, according to Goldman Sachs Group Inc. analyst Heather Bellini. The shares could become available for trading in the two or three days after Facebook reports earnings on Oct. 28, Bellini said.
Facebook has risen 16 percent since the deal was announced, compared with a 4.7 percent gain in the S&P 500, as the company boosted mobile advertising and introduced products to help marketers better target consumers. A flood of new shares may add to volatility next week, and investors should use options to preserve the value of their Facebook holdings, according to Katherine Fogertey and John Marshall, equity-derivatives strategists at Goldman Sachs.
?We?ll see the event volatility elevated into earnings, and that?ll continue into the lockup expiration,? Kurt Ayling, a technology, media and telecom analyst at New York-based Susquehanna Financial Group LLP, said in a phone interview. ?It?s not uncommon to see. It can have a big impact if the shares are enacted.?
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