* Volatility in shares expected due to end of lock-up
-analyst
* About 234 mln shares held by employees eligible for sale
Oct. 29
* Shares down 3.8 pct at $21.11
(Adds analyst comments, updates share price)
Oct 31 (Reuters) – Facebook Inc shares fell 4 percent
in busy trade early on Wednesday as the company allowed
employees to start selling some stock.
The world’s largest social network waived a provision that
prevented employees from selling shares until Nov. 14. As a
result, Facebook staffers were able to sell their vested shares
on Monday. About 234 million shares held by
employees were eligible for sale in the public market.
However, because the markets were closed on Monday and
Tuesday in the wake of powerful storm Sandy, Wednesday was the
first trading day.
“I don’t really understand why Facebook (chose) to unlock
virtually all of its compensation within the year of its IPO,
but they did,” said Michael Pachter, an analyst with Wedbush
Securities.
“They made a mistake and set the company up for volatility.”
More than 1 billion Facebook shares held by employees,
insiders and early investors are set to become available for
trading by year’s end.
Facebook suffered a painful public debut earlier this year,
as investors worried about the company’s ability to keep up
revenue growth and the large pool of additional shares in the
lock-up that are now hitting the market.
Wall Street also has cast a gimlet eye on Facebook and its
ability to attract mobile revenue as more people turn to
smartphones and tablet devices to access the Web.
Last week, Facebook said it increased mobile advertising
revenue at a faster than expected pace, totaling $150 million in
the third quarter. Estimates had pegged mobile revenue at $40
million to $50 million in the second quarter.
Shares of Facebook are down more than 40 percent since the
IPO. The stock was down 3.8 percent at $21.11 on Wednesday
morning, off an earlier low at $20.73.
(Reporting By Jennifer Saba; editing by Gerald E. McCormick,
Claudia Parsons and Matthew Lewis)
