NEW YORK — Facebook Inc.’s stock rose 12.6 percent Wednesday, despite expectations that it would fall because more than 850 million additional shares in the company were being freed up for sale.
Facebook went public in May at $38 in an initial offering of stock that turned out to be a letdown for investors. The price has not hit $38 since. It closed at $22.36 Wednesday.
Wednesday marked the expiration of Facebook’s biggest lockup period, which is a time following an IPO that prevents insiders from selling stock. In all, 773 million shares became eligible for sale, along with 31 million restricted stock units. About 48 million shares held by former Facebook employees also became eligible for sale, bringing the total to 852 million. These shares are added to what’s already been available for trading, increasing the supply and potentially lowering the overall price.
Lockups are common and are designed to prevent a stock from experiencing the kind of volatility that might occur if too many shareholders decide to sell all at once. A previous lockup expired Oct. 29; the stock fell nearly 4 percent two days later when the market reopened after the hurricane.
Facebook had its biggest one-day gain Oct. 24, the day after it reported stronger-than-expected third-quarter results. The stock added 19 percent that day, closing at $23.23.