UPDATED 13:02 EDT / SEPTEMBER 05 2012

Facebook Tries to Cheer Up Investors with Buyback, Delays Employee Cash Ins

Social media behemoth Facebook lists a sizable portion of the world’s population as users, but is still struggling to monetize those hundreds of millions of eyeballs. That is one of the main reasons the company, which traded $38 a share on the morning of its IPO, has seen its stock price plummet to below $18 today.

In an attempt to stabilize its declining stock, Facebook posted a few updates that seemed to have cheered up investors a bit: plans to withhold about 101 million shares for tax purposes were announced, alongside news that employees will have to wait a bit longer to sell their shares and options.  That apparently includes CEO Mark Zuckerberg, who is the biggest shareholder of the social media network.

Employees and some of the company’s early backers will only be able to sell their cheaply-bought stake after October 29 – this first window will free up over 200 million shares. Another opening in November will add another 780 million to that number, followed by yet another cash-in opportunity in December and a final one in May 2013. This is going to drive the stock down even further, but for the time being, existing investors are safe from any radical new losses.

“While it’s great that Mark isn’t selling, you’re still saddled with significant selling pressure on the stock,” said Richard Greenfield, an analyst with BTIG Research. “The lock-up monkey on their back isn’t going away because Mark isn’t selling.”

There’s also the fact that while this move will certainly help mitigate the company’s near-term decline, it’s far from being a permanent solution. Facebook, which is suffering from a mass exodus of developers on top of everything else, needs to sort things out.


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