Facebook Inc, Google Inc, LinkedIn Corp Insider Selloffs Mark Trend

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Facebook Inc (NASDAQ:FB) Chief Operating Officer Sheryl Sandberg’s sale of the social network’s shares has been well-documented, as have her colleagues’ sales. However, those sales are part of a bigger trend within the technology industry, as The Economic Times notes. Insiders from several major companies have unloaded quite a few shares of their companies’ stock recently.

Facebook Inc, Google Inc, LinkedIn Corp Insider Selloffs Mark Trend

Facebook insiders sell

Regulator filing with the Securities and Exchange Commission indicate that since the beginning of the year, Sandberg has raked in a cool $89.8 million in Facebook Inc (NASDAQ:FB) shares. The social network’s chief technology officer, Mike Schroepfer, has sold about $13 million worth of the company’s stock.

Chief Financial Officer David Ebersman, Chief Accounting Officer Jas Athwal and Business and Marketing Partnerships Vice President David Fischer have also unloaded some of their Facebook Inc (NASDAQ:FB) stock since the beginning of the year.

Google, LinkedIn insiders sell

Insiders at Google Inc (NASDAQ:GOOG) and LinkedIn Corp (NYSE:LNKD) have also sold off stock in their companies. Eric Schmidt, executive chairman of Google, raked in $111.7 million during the months of January and February by selling his shares. Google co-founder Larry Page has brought in $98.9 million, while fellow co-founder Sergey Brin sold $95.4 million worth of shares since the beginning of the year.

LinkedIn Corp (NYSE:LNKD) CEO Jeff Weiner unloaded $39.5 million worth of his company’s stock during the first quarter. Co-founder Reid Hoffman sold $76.6 million worth of LinkedIn shares.

According to The Economic Times, in all of these cases, the insiders sold more shares than they usually do, and each of the sales ended up being well-timed.

Facebook, LinkedIn shares fall

Shares of Facebook Inc (NASDAQ:FB) have declined 21% since March 10, which is when the big fall started. Since March 6, Google Inc (NASDAQ:GOOG) shares have declined by nearly 20%. LinkedIn Corp (NYSE:LNKD) has also fallen, losing 21% since March 6.

Meanwhile any insiders who didn’t sell, like those at Netflix, Inc. (NASDAQ:NFLX), Twitter Inc (NYSE:TWTR) and Priceline Group Inc (NASDAQ:PCLN), have missed out on selling at the companies’ recent high prices. Of course many Twitter Inc (NYSE:TWTR) shares are still under a lockup period which will be expiring next month.

Why insiders sell

Insiders typically set up trading plans so that they can plan sales of their companies’ stocks before they have privileged information which could affect the share price. They know when Wall Street is getting too excited about their company, pushing its share price beyond what the company is truly worth. As a result, they can schedule their trades at certain thresholds when they believe the stock is getting too high.

For example, LinkedIn Corp (NYSE:LNKD) was being priced at nearly 100 times earnings, while Facebook Inc (NASDAQ:FB) was being priced at 30 times. Meanwhile Apple Inc. (NASDAQ:AAPL)’s price to earnings ratio was around 13, while Microsoft Corporation (NASDAQ:MSFT)’s was around 15.

Apple, Microsoft execs keep their shares

Both Microsoft Corporation (NASDAQ:MSFT) and Apple Inc (NASDAQ:AAPL) have managed to hold onto their smaller gains through the recent tech correction. Of course neither of their CEOs sold any of their shares. Microsoft founder Bill Gates has been slowly selling his shares, but on a regular basis.

If the CEOs of either company did sell at their current valuations, this would suggest that they don’t believe in their companies. This would send a different signal to Wall Street that what was sent by the other executives’ sales, which meant nothing but their realization that investors’ valuations of their companies were too high.

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