It marked the fourth time a torrent of the social networking giant's shares were let loose for trading since the company's hugely hyped initial public offering (IPO) on May 18 at $38 a share.
The reaction to the sizable release of shares has been mixed.
Facebook stock fell to $28.61 Friday and ticked lower in afterhours trading. Option activity was also bearish, with puts still exceeding bullish calls over the next three months.
The fall reversed the surprising upward trend enjoyed amid the third and largest lockup expiration. On Nov. 14, 777 million shares, or about one-third of shares outstanding, were freed. Investors and analysts were bracing for the worst, but shares soared 12.5%.
In fact, Facebook stock gained more than 40% over the month's time between the third and fourth lockup expiration.
During the first lockup expiration on Aug. 15, when 270 million shares were set free, "smart money" and early investors quickly dumped shares. Over the course of the third lockup expiration on Oct. 29, with 234 million shares unleashed, shares slid 4%.
But now that four of the five lockup period expirations are over, more analysts are bullish than before.
"With improved visibility on the company's mobile transition, the majority of the lock-up expirations now behind us, and the potential opportunity from new products, we remain positive on Facebook shares," wrote Analyst Arvind Bhatia at Sterne Agee, who issued a "Buy" rating on Nov. 27, with a price target of $32.
Current Outlook for Facebook Stock (Nasdaq: FB)
One thing making analysts like Bhatia more bullish on Facebook stock is increased clarity on how Facebook can make money – something missing when it issued its IPO in May.
The biggest concerns surrounding FB then included its lofty valuation of $100 billion, its lack of mobile presence and how it was going to monetize it massive 1 billion member user base.
That's why shares plummeted roughly 38% in the first two months of Facebook trading as a public company. By September, shares hit a low of $17.55.
Facebook's largest shareholder, CEO Mark Zuckerberg, stepped in and pledged not to cash in his massive stash of stock, which temporarily tempered the slide.
Then came word that Facebook was morphing into a true mobile company, addressing the social network's slow foray into the explosive mobile arena.
Last Thursday, Facebook debuted its revamped Android app, built specifically for that platform. Among welcome changes are that the app opens faster than it used to, and Facebook feastures like the News Feed update at a quicker rate than before.
Plus, Research in Motion's (Nasdaq: RIMM) two new highly anticipated Blackberry smartphones that roll out in January have a built-in Facebook application.
Some analysts recently have upgraded the stock because of some promising developments: the additions of a pay-for-post program, gift registry, new ad collaboration with retailers, and the stock's addition to the coveted Nasdaq 100 Index.
Trading under $27, shares are a good way off the $38 IPO price and high of $45, leaving remaining IPO investors still looking at a sizable loss.
Friday's share-price slide was a reminder that hurdles remain in FB being a reliable investment. For example, there has been talk that users are spending less time on the site, are upset over privacy issues and are flocking to other sites like Google+ (Nasdaq: GOOG) and Pinterest.
If FB doesn't trade at or above its debut price soon, prospective investors may completely lose any interest and hunt elsewhere.
Facebook will face the last expiration on its IPO's one year anniversary, May 18, 2013. We'll see then if there will be something to celebrate.
Facebook stock was down almost 1% in trading Monday morning to $26.56.
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