Facebook Inc (NASDAQ:FB) co-founder, Dustin Moskovitz sold 450,000 shares within three days, each day offloading 150,000 shares of his stake in the world’s social networking giant. This has reduced his ownership in class A shares of a company that he helped build from scratch, to just 6.15 million shares.
According to Reuters, Dustin A. Moskowitz trust also owns a staggering 106.8 million class B shares, which usually hold more voting power, as compared to class A shares. Additionally, if Moskowitz wanted to convert his class B shares to class A shares, he can do that at any time on a ratio of 1:1.
The report also indicates that Moskowitz has been offloading his class A shares since the 19th of August, the same date that insiders were given the nod to sell their shares, after the 90 day curfew. This came only three days after the first block of 271 million shares was released in the market, as per the lock up release schedule.
The next Lock up release is scheduled to take effect between October 15th and November 13th, and this will involve a block release of 243 million shares to the market.
However, Facebook Inc (NASDAQ:FB) will not be able to follow on with a secondary offering, as many companies do, due to its deteriorated stock price since going public. The stock sold at an initial public offer price of $38 per share, and has since been on a downward trend to trade at a low of approximately $19 per share, despite few glimpses of recovery in June.
While Facebook Inc (NASDAQ:FB)’s structure remains stable, as it sits on a free cash flow of $10 billion, along with good levels of leverage, its poor performance at the NASDAQ stock excjange has not gone well with a majority of investors, with many being skeptical over the future of the stock. Additionally, the company also reported a loss in Q1 2012 since becoming a public company, further worsening the situation.
The dip in stock price is not only likely to affect public shareholders, but also the employees of the company, and eventually the company itself. This is because of the shares held by the employees, which they deem to be part of their compensation. A decline in value of the stock will mean reduced value in compensation, therefore, possibly eliciting a mass exit.
Finally, it would be interesting to see how the employees are going to treat their current stock ownership in the company, once the next lock-up release date expires in October 15th. Perhaps they could follow in the footsteps of the co-founder.