S&P analyst Scott Kessler upgraded Facebook based on the fact too much is being made about the lock-up expiring.
“We do not expect early employees and investors will be aggressive sellers of FB shares at current levels, after the stock has fallen more than 50 percent from the intra-day high set on May 18, the IPO date,” Kessler said in his note. He rates Facebook a “buy,” with a $25 price target.
Thursday isn’t the only lock-up for Facebook shares. Over the next nine months, more than 1.8 billion shares will be eligible for trade, as Facebook staggered the lock-up schedule.
Much made been made about Facebook’s problems since becoming a public company. It started with its initial public offering, which was botched by the Nasdaq and its lead book-runner, Morgan Stanley.
The major concern facing the business is how to monetize its mobile audience, which now accounts for more than 50 percent of all its users. It has come under scrutiny for having millions of fake accounts (which the company acknowledged) and concerns over ad business, using “bots” to goose ad sales (which the company denies). (Read More: Does Facebook Have a “Bot” Problem?)
There are several reasons for Facebook shares to continue falling that have to due with the fundamentals of the business. The lock-up expiring when shares are down more than 50 percent from its IPO price isn’t going to add fuel to the fire.
—Written by TheStreet.com’s Chris Ciaccia
Additional News: These Investors Sold Stock in Facebook IPO
Additional Views: One Reason to Hang On to Facebook Shares: Pro
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