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Facebook’s stock fell nearly 7 percent after trading started this morning, hitting a new low of $19.76.

The stock is at $19.90 as I publish.

The downward pressure comes from a massive sale of shares by company insiders — board members, institutional investors, and executives — who are selling for the first time today because of the expiry of a so-called “lockup” agreement. That agreement requires privileged shareholders to hold on to their stock for a certain amount of time to prevent the market from being deluged with too many shares after an IPO. This lockup agreement lasted for 180 days, but more expiry dates are coming, which could put further downward pressure on the stock.

To some extent, the downward pressure today was expected, as we wrote on Monday. Investors who were eligible to sell today include Peter Thiel, Accel Partners, Elevation Partners, Greylock Partners, Microsoft, Goldman Sachs, and Tiger Global.

The wider market knew that the expiry happened today, because it was widely publicized in Facebook’s public documents filed with the SEC. Typically market players factor this into their assessment of a stock’s value, and they trade the stock lower going into such an expiry. In perfect conditions, therefore, a lockup expiry’s effects are already factored in, and you don’t see a stock get pounded so hard on the actual expiry date.

But in Facebook’s case, the stock has struggled ever since the company went public on May 18. The market is having a hard time figuring out how to value Facebook. It’s had incredible hype, but investors have worried about its ability to monetize its mobile site, and many were disappointed by the company’s bad fumbling of the IPO process.

Pie chart showing when lockups on Facebook shares expire. Source: WSJ

Above: Facebook dilution starts today.

About 271 million fresh shares were released for sale this morning. Some 22 million shares changed hands in the first 10 minutes of trading today. Within the first half-hour, that volume soared to 42 million.

Facebook’s stock is now half of its value when it went public just three months ago.

The lockup slump today follows similar drops in the stock of other recently public companies, Groupon and LinkedIn. Groupon fell 10 percent on its lockup, while LinkedIn fell almost 7 percent. And then there’s the massive hit that social gaming company Zynga took from insider sales, where lawsuits are already flying. In some ways, these stocks have been inextricably tied together in investors’ minds, because they were the first public companies representing the “social” trend — and there’s fear the entire sector was over hyped.

Today is only the first in a wave of lockup expirations coming for Facebook. A total of 1.8 billion shares are held by insiders with lock-up agreements that expire over the next nine months, with the next one happening 90 days from now. That doesn’t mean the full 1.8 billion shares will be sold, because insiders may decide to hold on to their shares rather than sell them — especially if they feel the company is now too undervalued. Also, some of those shares are apparently being released by Facebook to cover a tax bill that it may instead decide to pay through a credit line. By using a credit line, it can avoid releasing so many shares on the market. You can find more reporting on this from CNN.

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