Facebook Shares Dip After Sandberg Offloads Shares

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Another executive has offloaded FAcebook shares, further denting the market’s confidence in the social networking giant

Facebook’s chief operating officer Sheryl Sandberg has given herself an early Christmas present by selling off a tranche of stock.

The sell-off triggered a share price fall in the social networking giant, as investors remain wary about the company and how it can achieve sufficient monetisation to appease Wall Street.

Share Price Woes

It emerged last Friday in regulatory filings that Sandberg had pocketed a welcome cash injection after she sold off sold 13,392 shares at $20.79 (£31.01) each, worth a total of $278,420 (or £174,273 in real money). According to Reuters, Sandberg also sold 339,512 shares at $21.10 (£13.18) each, worth a total of around $7.16m (£4.5m) last Wednesday (31 October).

However, before we start worrying that Sandberg is leaving herself a little short of Facebook stock, it appears she still owns roughly 20 million vested shares of Facebook stock, which is said to worth in the region of $420m (£262m).

And Sandberg was not the only executive selling off Facebook shares. The filing also revealed that Facebook’s chief accounting officer David Spillane, had also sold shares worth $5.38m (£3.4m).

The reason for the sudden sell off of shares was because last Monday (29 October) was the date that many Facebook staff and executives were able for the first time to sell their shares since its IPO in May, when the shares opened at $38 (£23.75).

However Hurricane Sandy had forced the closure of the stock markets, including the Nasdaq on Monday and Tuesday, so it was not until Wednesday (31 October) that staff could sell their Facebook share.

Facebook CEO Mark Zuckerberg meanwhile has pledged not to sell his stocks until September 2013, but the share sell off by his fellow executives was not well received by the markets. It was reported that Facebook shares fell 3.79 percent or $0.83 (£0.52) to close last Wednesday at $21.11 (£13.20).

On Friday shares in the company closed at £21.18 (£13.28), still a long way off the $38 IPO launch price.

In August a similar share sell off by Facebook co-founder Dustin Moskovitz also triggered a stock price dip.

Overvalued IPO?

Facebook’s share price has certainly experienced a torrid time since the company was floated back in May this year, a move that gave it a value of  $104 billion (£65.7 billion).

Many felt the shares were overvalued when they were floated at the IPO price of $38 (£24) per share.

There has been concern about the decline of Facebook’s share price for some time now, with some observers suggesting Facebook is failing to prove it could make substantial profit from advertising. Eighty-four percent of Facebook’s income is derived from advertising and a Swiss bank has even considered launching legal action over the matter.

Last month Facebook posted more losses, but managed to reassure investors after reporting that its mobile advertising revenue grew several times faster than expected in the third quarter.

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Author: Tom Jowitt
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