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No Facebook Pop as Company Concerns, Stock Market Weigh on Shares

The increased willingness to divest shares shows that insiders believe the risk/reward for continued investment is not overwhelmingly in their favor.

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 Facebook (FB) takes front and center stage today with its highly anticipated debut. We find it fairly surprising to see Facebook only up a few percentage points in initial trade given the amount of pent-up retail demand for its shares. Clearly concerns regarding the company's valuation, increased insider selling, and  General Motors (GM) news are weighing on the stock. Weakness in the stock market during the last several days is also likely playing a significant role.

We had a mixed reaction to the upsized offering size (the number of shares being sold by existing shareholders increased 53% and now constitutes 57% of total shares outstanding). We think Facebook insiders took advantage of the strong demand for Facebook shares, as they were able to sell an increased amount of stock without having a material impact on the IPO price. 

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James Krapfel does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.