You're already feeling another wave of dread at Facebook (NASDAQ:FB).
Tomorrow, another 773 million shares and 31 million restricted stock units become available for sale. CEO Mark Zuckerberg also has another 502 million shares that he can unload, but in a filing two months ago he explained that he has no intention of selling any shares for at least another 12 months.
When Facebook staggered its lockup expirations, it probably made a lot of sense. Instead of ripping off the bandage in one swift tug, the company would break it up into more manageable chunks. There are a lot of shares of Facebook out there, and the company didn't want everyone to crash the gate at the same time.
The drama doesn't end here. A smaller chunk of shares is freed up come December, and it won't be long before investors begin to wonder what Zuckerberg will do once next September rolls around.
Some will argue that this is why Facebook is untouchable as an investment. At any moment, everything can start to fall apart. You never know when itchy trigger fingers will sell shares. It's like a family reunion with layers of secrets waiting to come out at the most inopportune times.
I don't see it that way at all. All of this tension and dread make this a great buying opportunity.
In or out
Have Facebook insiders been selling? Some have. Director and venture capitalist Peter Thiel turned heads this summer by selling $400 million worth of his shares. No one is arguing that lockup expirations are entirely harmless. However, Facebook has held surprisingly steady since shedding half its value.
This isn't Zynga (NASDAQ:ZNGA) or Groupon (NASDAQ:GRPN). Both of those stocks have been obliterated since going public late last year, and the vicious cycle of executive defections and cashing out on the way out has been brutal.
Facebook has lost a couple of free hires, but it's not as if the model is broken. Zynga and Groupon are posting sequential declines in their flagship businesses, but Facebook is still growing.
Some insiders, especially those that have a sizable chunk of their net worth tied to Facebook stock, may find this an appropriate time to take a little money off the table. That isn't what investors need to be worrying about, though. Today's shareholders need to ask themselves if Facebook will be more relevant and more valuable in the future than it is right now.
How can the answer not be positive?
Cheaper than you think
Facebook may not seem like a screaming bargain here. Fetching 31 times forward earnings isn't going to win over too many value hounds.
However, analysts do see revenue growing at a 35% clip this year and by another 28% come 2013. Oh, and these Wall Street pros are generally skeptical about Facebook's initiatives that could really kick growth into high gear, including its mobile monetization efforts and its inevitable foray into search.
Then we get to the naysayers. There were nearly 88 million shares sold short by the end of last month. That's a new record of bearishness.
Shorts have to place buy orders to cover their shorts, and that short squeeze should be a bigger force pushing Facebook's stock higher than the pockets of selling that will take place as lockup restrictions run out.
What could trigger a short squeeze?
Well, would you really want to be short Facebook after this quarter? Did you see how the world's leading social networking website was a hotbed for partisan posts and meme sharing? It may have irked you. It may have entertained you. It may even have defined you. It doesn't matter. You do realize that both sides -- on both the presidential and local election levels -- spent plenty to make sure that their candidates were heard as sponsored posts.
Do you also want to be betting against Facebook the day it announces that it will be rolling out an enhanced search platform to its more than a billion active users?
It's going to happen, and probably sooner rather than later. Zuckerberg admitted this summer that he already has a team working on search. We're not just talking about taking on global search leader Google (NASDAQ:GOOGL) here. We're talking about a company that's already stickier than Google attempting to raise the bar.
Facebook knows what your friends like, where they've been, and where they've eaten. If you're searching for new music, a place for your next weekend getaway, or a nice Vietnamese restaurant, wouldn't you rather tap into people you know than whoever the highest bidder on Google just happens to be?
Facebook will raise the bar when it comes to search. Facebook will have a strong fourth quarter to report come early next year. Facebook will have a short squeeze to push its stock higher.
Are you really going to let what a few longtime stakeholders do in the coming days get in the way of enjoying the pop?
Have fun kicking yourself later if you do.
A world of opportunity
There's a new premium report on Facebook detailing the opportunities and challenges in store for its shareholders. The report includes a full year of updates, so time's ticking. Click here to check it out now.
Longtime Fool contributor Rick Aristotle Munarriz has no positions in the stocks mentioned above. The Motley Fool owns shares of Facebook and Google and has the following options: long JAN 2014 $20.00 calls on Facebook. Motley Fool newsletter services recommend Facebook and Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.