Facebook Continues To Slide, Co-Founder Selling 150K Shares Per Day

Even though Facebook is recognized as one of the most innovative software and internet startups in the world, it’s been a very forgettable past 3 months for Mark Zuckerberg and company.

Shares of Facebook ($FB) have continued to slide on a variety of analyst downgrades, concerns about hitting their 2013 revenue projections, and questions about their relationship with troubled game-provider Zynga ($ZNGA).

Overall, it seems as if the company just can’t catch a break.

The company debuted on May 18, 2012 in one of the largest initial public offerings in history at a mind-blowing $100B valuation, but since then a cloud of bad news has hovered over the stock.  Even though the company has only been public for a little more than 3 months, shares of $FB are already down an astounding 52%.

Although a barrage of bad news continues to hit the stock, Facebook still isn’t in the clear just yet… an even more disturbing piece of news surfaced last week.

Apparently Facebook co-founder, Dustin Moskovitz, has revealed that he is selling 150,000 shares of the stock per day.  So as if it wasn’t bad that the stock was struggling to live up to the hype already, a co-founder is rapidly selling shares in the company even at a ~50% discount to the IPO price.

Here is a quick look at some of his recent transactions:

Aug. 17: 150,000 shares, $20 average ($19.95 to $20.08), $3 million

— Aug. 20: 150,000 shares, $19.49 average ($18.79 to $20.03), $2.92 million

— Aug. 21: 150,000 shares, $19.38 average ($19.09 to $19.95), $2.91 million

— Aug. 22: 150,000 shares, $19.31 average ($19 to $19.52), $2.9 million

— Aug. 23: 150,000 shares, $19.51 average ($19.37 to $19.73), $2.93 million

— Aug. 24: 150,000 shares, $19.43 average ($19.26 to $19.66), $2.92 million

— Aug. 27: 150,000 shares, $19.22 average ($19.10 to $19.49), $2.88 million

— Aug. 28: 150,000 shares, $19.26 average ($19 to $19.37), $2.89 million

— Aug. 29: 150,000 shares, $19.19 average ($19.08 to $19.37), $2.88 million


So overall, it doesn’t paint a very good picture about Facebook’s current prospects in the short-term.  I still believe the fundamentals are strong at this company, but sentiment is a powerful force and it seems foolhardy to fight it at this point.

As a final note, I know that everyone enjoys the “schadenfreude” effect of seeing a company fail, but not this guy.  I avoided the Facebook IPO, but I am still interested in buying shares of Facebook at some point in the future.

It’s easy to bash a company and celebrate the failures of a certain company, however I see no value out of doing that… so I’m going to talk about solutions.

The question remains: what can Facebook do to turn this around?

I think the first step is for Mark Zuckerberg to announce an aggressive share buyback program if he truly believes his company is a bargain at this price.  It’s time for the young CEO to step up, put his money where his mouth is, and start showing some leadership before this side show continues.

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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