Facebook shares sink to new low as insider 'lockup' ends

Early investors and a handful of directors became eligible today to sell stock they own in the social networking company, putting more downward pressure on the stock.

So-called "lockup" periods, which prevent insiders from unloading shares too close to an initial public offering, generally start to expire 90 days after a stock makes its public debut.
Lockups are designed to prevent a stock from experiencing the kind of volatility that might occur if too many shareholders decide to sell a newly traded stock all at once.

Jon Burgstone, professor at the Center for Entrepreneurship and Technology at the University of California, Berkeley, points out that many of Facebook's shareholders had already been able to sell their stock through private stock markets before the company's IPO. In many ways, he added, "Facebook's IPO was really a secondary public offering. A number of large shareholders and early employees have already been cashing out."

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