Facebook Inc. fell the most in almost three months after a lockup expiration boosted the number of tradeable shares and a recent run-up in the stock price gave investors pause about how much higher it might climb.
The stock tumbled 5.1 percent to $26.81 at the close in New York, the biggest drop since Sept. 24. Shares in the operator of the world's largest social-networking service have declined 29 percent since selling at $38 apiece in an initial public offering in May.
Facebook came under pressure as about 156 million more shares became available for trading today, adding to the more than 1.5 billion already freed up for sale by insiders. Investors may have seen a good time to sell since the stock has risen rapidly amid rising optimism about the company's growth prospects, said Scott Kessler, an analyst at S&P Capital IQ.
"A lot of the good news seems to be priced into the shares," Kessler said. "What I think people are thinking about is, 'What else can happen?' whether it's driven by specifically by Facebook, or others, to drive the stock higher."
Menlo Park, California-based Facebook reported in October that sales rose 32 percent to $1.26 billion during the third quarter. That compares with the average estimate of $1.23 billion, according to data compiled by Bloomberg. That also matched the growth rate of the second quarter, snapping a streak of slowing sales increases. The results were followed by a 33 percent climb in the share price from the beginning of November through yesterday.
Facebook is also benefiting from efforts to sell advertising on mobile devices, where users are increasingly accessing the service. Ads delivered to people on mobile devices generated about $150 million during the quarter, or 14 percent of all advertising revenue.
Ashley Zandy, a spokeswoman for Facebook, declined to comment on the stock decline.
The bans on sales are put in place to prevent shares from flooding the market immediately after an IPO. The biggest lockup expiration to date was on Nov. 14, when restrictions lifted on 804 million shares. Smaller batches of stock became tradeable in August and October, and the next lockup lifts in May, according to a regulatory filing.
In addition to the new swath of shares freed up today, the stock sales today could be tied to rising worries about whether the U.S. Congress and President Barack Obama can come to an agreement before automatic tax increases take effect in January -- and avoid the so-called "fiscal cliff," according to Michael Pachter, an analyst at Wedbush Securities Inc.
"It appears like a decent place to take profit, and I think there's a lot concern about the fiscal cliff and tax rates going up," he said.