Facebook Slumps on Lockup Expiration: Any Cause for Concern?

Shares of Facebook, Inc. (NASDAQ:FB) traded as much as 5 percent lower on Friday after 156 million shares were released from lockup. The slump has pulled Facebook down over 1 percent for the week, reversing a 2.39 gain on Thursday.

Any Cause for Concern?

There was a tremendous amount of conversation surrounding Facebook the last time it faced a lockup expiration in November. The volume of shares being released was much higher — some 800 million shares were released — and precedence for how the market would react had not yet set in. The performance of the stock after the late-October release of 230 million shares did not convince investors that the stock would behave one way or the other.

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At the end of the day, Facebook’s stock wasn’t any worse for the wear. Shares are up over 23 percent over the last three months, with pretty much all of that growth coming from a 32.6 percent gain in November.

Friday’s sell-off comes despite news that the company retooled its mobile app for Google’s (NASDAQ:GOOG) Android OS. The app now uses native code instead of HTML 5 and should run faster…

CHEAT SHEET Analysis: Technicals on the Stock Chart are Getting Stronger

A core component of our CHEAT SHEET investing framework evaluates a stock’s performance against its moving averages and major indexes for reference.

Facebook’s stock price was recently 3.69 percent above its 20-day simple moving average, or SMA; 18.73 percent above its 50-day SMA; and 10.43 percent above its 200-day SMA. This is a reflection of how competently Facebook has pursued growth and monetization over the past few months. The company’s performance has been buoyed by a rational renegotiation of its contract with Zynga (NASDAQ:ZNGA).

Shares are still down about 28 percent for the year and well below their IPO price. By comparison, the Nasdaq has grown nearly 14 percent this year to date. However, Facebook has come up over 23 percent in the last three months, where the Nasdaq has fallen about 6.8 percent.

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