If you’ve been wondering what’s wrong with Facebook Inc (NASDAQ:FB) stock lately, you’re certainly not alone. Once the train rolled out of the station a few years ago, it has rarely stopped to fuel up, but then February arrived and someone hit the brakes. Analysts are convinced that Facebook stock is the victim of irrational fear and bad headlines, and while those are certainly factors to the stall-out, there’s always more to the story.
As it turns out, Mark Zuckerberg and a long list of other insiders unloaded plenty of Facebook stock during the month of February. Of course, it is tax season, after all, and Zuckerberg continues to sell stock to fund the non-profit he supports with his wife. So now that February is over with, does that mean the Facebook train will be leaving the station again? At least one writer thinks that’s highly unlikely.
Regulatory filings with the Securities and Exchange Commission reveal that Zuckerberg unloaded approximately 2.7 million shares of FB stock in February, and Reuters estimates that he raked in $482.2 million for the Chan-Zuckerberg Initiative. Just this week, he unloaded about 685,000 shares for a total of $125.4 million.
Here’s what Charlie Munger had to say at the Daily Journal meeting
Charlie Munger spoke at the Daily Journal Corporation's Annual Meeting of Shareholders today. Although Warren Buffett is the more well-known Berkshire Hathaway chief, Munger has been at his side through much of his investing career. Q4 2020 hedge fund letters, conferences and more Charlie Munger's speech at the Daily Journal meeting was live-streamed on Yahoo Read More
A spokesperson for the non-profit organization told Reuters that Zuckerberg’s sales of Facebook stock are helping fund “work in science, education and issues related to justice and opportunity.” The Facebook CEO himself revealed last year that he planned to sell between 35 million and 75 million shares of FB stock in the 18 months following, which would amount to roughly $13 billion, all earmarked for the Chan-Zuckerberg Initiative.
Zuckerberg isn’t the only insider to sell Facebook stock during February, however. SEC filings reveal a long list of other insiders who also sold FB stock. VP David Fischer converted some restricted stock units this month and sold thousands of shares, including about 18,000 shares this week as part of his prearranged trading plan.
Other insiders who have converted and/ or otherwise moved around some FB stock this month include Chief Operating Officer Sheryl Sandberg, Chief Financial Officer David Wehner, director Kenneth Chenault, Chief Technology Officer Michael Schroepfer, General Counsel Colin Stretch, Chief Product Officer Christopher Cox, and director Jan Koum. That’s quite a list, as usually insider sales of Facebook stock occur on a much smaller scale, based on the regulatory filings of insider transactions.
February just wasn’t a good month for FB stock, as it was in a downward trend for much of the month. We can put this into perspective when we realize that the stock has gained a whopping 536% in the last five years. It was bound to take a breather at some point, and analysts have been attempting to soothe investors’ fears by saying that the sell-off is simply irrational and the worst will be over soon.
However, InvestorPlace contributor James Brumley doesn’t think the pain is over for Facebook stock just yet. He called attention to a number of red flags that could signal a rough patch for FB, although he also emphasized that this could present a buying opportunity for those with an extremely bullish view of it.
For example, he noted on the FB stock chart that the shares ran into some trouble in late 2017 and haven’t really recovered. He also said that other major Internet service companies didn’t experience the same sort of problem with their stock prices. He pointed to the February low marked early in February and didn’t reach a lower high until last week. This week was another bad one for FB stock, he added, as it dipped back under all of its major moving averages except for the 200-day. He also pointed out that the 200-day moving average has served as a floor for Facebook stock in the past, as early in February, it bounced off that average in a solid reversal, albeit a short-lived one. Brumley also believes that if the current bear trend in FB ends up taking hold and the stock plunges below $169, which will take it under the 200-day moving average, there’s not much room left before another round of profit-taking can be expected.
He also pointed to some key patterns that emerged on the FB stock chart this week, including a bullish candlestick pattern followed by a pair of bearish candlestick patterns. Interestingly, Facebook stock has undergone three big reversals during “one-week rally” attempts since the year started. At this point, it doesn’t look like $169 is at risk, but FB is in the red again as of this writing, down 0.63% at $174.87.