It may finally be time to start buying stock in Facebook. Maybe.
After barely finishing above its IPO price of $38 on its opening day, the stock has never gone above that price again. In fact, the stock has not gone above $30 for nearly a month now, and is currently down 43% from its peak. Earlier this month, the stock hit an all time low of $20.88.
And yet there are signs of hope: a Facebook board member has disclosed that he has purchased stock in the company worth around $1 million, and another big name company has also announced that it will be holding onto its stock once Facebook’s lockout period ends next week.
Netflix CEO Reed Hastings has purchased 47,846 shares of the stock at $21.03 a share, according to a filing with the Securities and Exchange Commission on Friday.
These are the only shares in the company Hastings owns. He was also given 20,000 restricted shares when he became a member of the Facebook board of directors in June 2011, but those shares have not vested yet.
Hastings seems to have more confidence in Facebook’s stock than that of his own company, as he was selling off his Netflix shares weekly until September 2011.
At the same time, Microsoft says it will be holding onto its shares once Facebook’s lockout ends, a source told Bloomberg on Saturday.
The company will be keeping its shares as a way to combat Google, and not as a way to make money. Microsoft has 26.2 million Facebook shares, or 1.7 percent, worth $571.9 million.
Hastings also serves on the board of Microsoft.
Lockout period ending
A lockout period is an amount of time, usually 90 to 180 days, when those inside the company, as well as those who have a majority stake, are forbidden to sell shares. This is done to avoid the market becoming flooded too quickly.
Facebook’s lockout period will end on August 15, at which point its biggest investors, such as Goldman Sachs, will be allowed to sell their shares. Some 268 million shares will hit the market on August 16, while another 1.3 billion shares will become available on November 14.
Not all investors will be holding onto their shares. Fidelity Investments, an early and major purchaser of Facebook stock, let go of 1.9 million shares in June, when the social network’s value on the public market fell toward the $25 mark.
With all of these shares about flood to the market, it will be fascinating to see how Facebook’s stock will react. For now, though, those thinking of investing in Facebook have at least some positive news to hold onto.
In reaction to this news on Friday, shares were up 3.79%, ending at $21.81 for the day.
A Facebook spokesperson declined to comment.
(Image source: buzz.money.cnn.com)