Given the amount of Facebook stock that Jan Koum owns in Facebook, sell-off might be a bit of an understatement but his bank account just got a lot bigger.
WhatsApp CEO and founder goes a different route during the holidays
For many, Thansgiving means travel near and far, overeating or in the case of my highly dysfunctional family, heavy drinking. For founder and WhatsApp CEO, Jan Koum, it meant unloading a fair amount of Facebook stock as it trades at a near high. In 2014, Koum sold his messaging startup WhatsApp to Facebook for a whopping $19 billion. While some of that was in cash, a good deal of it was in Facebook stock. Koum, last week, sold roughly $275 million worth of Facebook stock in numerous trades according to a filing with the Securities and Exchange Commission.
For much of the past decade, Crispin Odey has been waiting for inflation to rear its ugly head. The fund manager has been positioned to take advantage of rising prices in his flagship hedge fund, the Odey European Fund, and has been trying to warn his investors about the risks of inflation through his annual Read More
Koum utilized a Rule 10b5-1 trading plan in order to rid himself of over 2.5 million shares while Facebook is near record highs and up over 30% in calendar year 2016. The 10b5-1 trading plan is designed to avoid the appearance of impropriety, or in this case, insider trading. The plan is set up to allow corporate executives to to set trading dates in advance, sell when a stock reaches a certain price, or assign brokers to buy or sell stock as that broker deems necessary.
Early investor in Facebook who is also a longtime board-member, Marc Andreessen sold nearly three-quarters of his stake in Facebook in early November as well. The sale of Andreesen’s shares brought him around $160 million.
A Facebook spokesperson familiar with the sale declined to comment on the two men’s sales of so much stock. The obvious answer is that the stock is trading at a near all-time high. However, when two insiders cash in at the same time it begs the question, “Is something wrong at Facebook that us ordinary investors are not privy to, is the social network market saturated?”
“While I don’t believe that to be the case, it could be seen as a valid concern,” says Gordon Meagher of CNA Finance.
Koum’s sale of nearly $275 million represented a little less than 4% of his holdings in Facebook. He hardly divested himself of Facebook, perhaps he just wants to buy a dozen homes. He’s still holding about $7 billion in Facebook stock at its present price. Koum is also due a number of vested shares in Facebook in the coming years so don’t be surprised if you see a similar article to this one in the future.