Facebook founder Mark Zuckerberg has said he will not sell any stock for at least 12 months as Facebook moves to reassure nervous investors.
Facebook stock has plummeted to less than half of its value since its inital public offering at $38 in May and investors had feared the release of millions more shares onto the market would depress the price further.
At one point on Tuesday, shares dropped to just $17.55 but Facebook countered by promising not to sell stock to cover a tax bill of almost $2bn alongside the Zuckerberg announcment.
Facebook said it would cover the stock compensation tax bill with existing cash and with borrowing from its credit facilities.
“The fact that they are using cash is a good thing. It feels like a mini buyback in a way because you’re in essence reducing your share count by 101 million shares,” saidSusquehanna Financial Group analyst Herman Leung.
The market reacted positively and shares climbed 31 cents, or 1.8%, to $18.04 in after-hours trading.
Facebook has 955 million users, but Wall Street has become increasingly sceptical about its long-term money-making potential.
The company also announced measures to reassure employees who have been forced to hold on to their shares while investors have been selling, allowing them to cash in their stock weeks ahead of schedule.
Staff will now be able to sell about 234 million vested shares on October 29 – four trading days after it reports third-quarter financial results on October 23.
Previously their sale had been restricted until November 14.
More than one billion Facebook shares held by employees, insiders and early investors are set to become available for trading by the end of the year.
