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Google shares dip ahead of first lockup expiry

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CIOL Bureau
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SAN FRANCISCO: Shares in newly public Google Inc. fell two percent as investors braced for the expiration of a lockup period that has kept insiders at the Web search company from selling stock.

Five lockup expirations, with the first one on Thursday, are expected in coming months and could flood the market with significantly more stock than was sold in the initial public offering, if company insiders choose to sell.



Since its August 19 debut at $85 a share, Google stock has climbed as high as $113.48 on the Nasdaq. It finished at $100.25 on Wednesday, a decline of almost 12 percent from the peak price, but still well above the IPO price.



On Thursday, 4.7 million shares will become eligible for public sale, according to a Google filing with the U.S. Securities and Exchange Commission.



"Shares of companies approaching lockup dates tend to experience selling pressure," American Technology Research analyst, Mark Mahaney said in a research note in which, he analyzed the trading trends of 2003 IPO shares ahead of lockup expirations.



"It (is) reasonable to assume that Google shares could see similar selling pressure going into major lockup release dates, particularly this upcoming November and February," said Mahaney, who has a $110 target price and a "hold" rating on Google's stock.



In mid-November, 39.1 million Google shares will be eligible for sale -- that is more than two times the 16.9 million shares sold in Google's IPO.



In mid-December, 24.9 million shares will become eligible for sale. The same number will be released in mid-January.



Google's 180-day lockup expiration on February 14 will make 176.8 million shares eligible for sale, about 9 times more than were sold in the IPO.



"This one (on Thursday) is like the preseason. It's like the warm-up to see what it could be like when it gets to be larger and there are more people to focus on it," Janco Partners analyst, Martin Pyykkonen said, referring to Google's first and future lockup expirations.



Investment banks normally require IPO lockup periods of 180 days.

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