Google Stock Falls as Lockup Expires
Shares of Google Inc. fell nearly 7% on Tuesday, as selling restrictions were lifted on 39 million shares held by employees and early investors in the newly public Web search company.
Google finished down $12.33, or 6.7%, to $172.55 on Nasdaq. Nearly 21 million shares traded hands, on the high end of typical daily volume over the last month.
The lockup expiration more than doubled the number of shares eligible for trade, to around one-fourth of total shares outstanding.
Industry analysts said the stock had been expected to slip as the selling restrictions were lifted, but they said most investors probably were more interested in Google’s future growth and profit potential.
“It’s really the underlying fundamentals of the company that are more important than the supply and demand characteristics of the stock,” said David Garrity, an analyst at Caris & Co. “We would argue that investors should take advantage of the opportunity” of a sell-off to buy more shares.
The stock debuted at $85 on Aug. 18 and hit a closing high of $196.03 on Nov. 1.
Analyst Robert Becker of Argus Research Corp. said Tuesday’s lockup expiration would have less of an effect on Google stock than the company’s performance.
“More important factors driving the immediate share price will be investors’ outlook for how Internet services companies are going to do in the fourth quarter and what the impact of Google’s products will be over time,” Becker said.
Nearly 227 million more shares are scheduled to become eligible for trade over the next three months. That figure includes almost 177 million shares that will become available for trade in mid-February, when the last IPO-related selling restrictions are lifted.
Google sold 19.6 million shares in its initial public offering. Analysts had estimated that the fast-growing company had about 27 million shares in its float, or those available for public trade, prior to Tuesday’s lockup expirations.
Mountain View, Calif.-based Google runs the world’s most popular Internet search engine.
