Although Thursday’s Facebooklock-up expiration might tempt shareholders to sell their shares, one analyst thinks the next major expiration in November will spur the real selloff.
The Aug. 16 lock-up expiration “is a tiny little fluffy slipper compared to the giant army boot that’s going to drop in November,” Michael Pachter, managing director and analyst of Wedbush Securities, told CNBC’s “Squawk on the Street” on Monday.
Investors fear that when the 271 million Facebook shares hit the market, its stock price could sink lower.
But Pachter argues that the next lock-up expiration could spur even more selling. He said that there will be “1.2 billion shares unlocking and the lock-up date in November is after the election. So we’re going to know if all those selling shareholders who make more than $250,000 a year are going to see their (capital) gains rates go up in January. I think that’s a much bigger incentive to sell than the one this week.”
As for the disappointing showing in Facebook stock since its initial public offering, Pachter said he doesn’t “think anybody really knows what Facebook is worth.”
He said the $38 offering price was an honest error among Facebook underwriters.
"The advisors overestimated demand for the stock, and I think the advisors issued way too many shares. They told the company to issue a lot more shares than the market was ready to absorb,” he said.
—By Jane Burnett, Special to CNBC.com
CNBC Data Pages:
- Dow 30 Stocks—In Real Time
- Oil, Gold, Natural Gas Prices Now
- Where's the US Dollar Today?
- Track Treasury Prices Here
Michael Pachter does not own shares of Facebook. Wedbush Securities makes a market in the securities of Facebook.