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Posted on 24 June 2011 | 7,185 views

Facebook Staff Fears Tech Bubble and Dumping Their Stock Shares Before IPO Crash?

It seems that Facebook employees may be leading a growing trend in Silicon Valley — cashing in on their soaring stock shares before a feared tech bubble crash wipes away their liquidity as it did to so many a decade ago.

Facebook currently has 1,700 employees, many of whom have ownership stakes in the company, including Facebook founder Mark Zuckerberg.

Facebooks latest 5-for-1 stock split is the third split in the company’s history which has left many employees folding quite a bit of “Facebook” stock. The privately held social networking company was founded in 2004 and previously executed 4-for-1 stock splits in 2006 and 2007.

Pre “Inital Public Offering” stock splits are a common move for fast-growing private firms. Google split its stock (Ticker Symbol: GOOG) several times before going public in 2004 for $85 per share.

Some Facebook employees who recently left the company are now trying to sell their stock before the Facebook 2012 countdown — since company policy bars current employees from cashing in their shares.

Facebook’s shares won’t have a clear market value until the company goes public — don’t expect the company to IPO until 2012 at the earliest. Companies such as Renren (Ticker Symbol: RENN), China’s Facebook equivalent, which was a hot investment in its initial public offering a month ago is down 62 percent from its first-day close.

Until Facebook goes public, the primary outlet for those who wish to sell shares is SecondMarket, an exchange that enables accredited investors to buy shares of privately held ventures. Facebook stock is accounting for 45 percent of all trades on SecondMarket.

Employees were limited to selling up to 20 percent of their vested shares, but for some, that wasn’t enough. Aware of stock trades through SecondMarket, Facebook has helped to broker sales for employees who wish to sell their Facebook shares twice — T. Rowe Price is currently brokering Facebook employee stock trades.

Many employees who own stock options and have been at the company since the early days after its founding seven years ago have been eager to profit.

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2 Comments »

  • Jessica Johnson said:


    Facebook Staff Fears Tech Bubble and Dumping Their Stock Shares Before IPO Crash? http://bit.ly/j32cAm

  • Sean Vernall said:


    I wonder how the millions of people quitting Facebook together with the launch of Google Plus will affect the value of those shares.

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