Business World

Wednesday 20 November 2019

Key Facebook investor sells most of his stake

Peter Flanagan

SHARES in Facebook continued to fall yesterday after one of the company's most important investors sold most of his holding in the company.

In a filing published late on Tuesday, it was revealed that Peter Thiel had sold most of his shares in Facebook for about $400m (€300m).

The filing to US regulators shows Mr Thiel sold just over 20 million shares in the company at prices between $19.27 (€15.45) and $20.69 (€16.58).

His decision to sell was echoed by a number of other early investors, including Netflix founder Reef Hastings and renowned technology guru Marc Andressen.

None sold a stake comparable to Mr Thiel's, though.

Mr Thiel founded the payments company PayPal and has since become one of the most important investors in Silicon Valley. He was one of the first high-profile names to back Facebook and his endorsement gave the fledgling company huge credibility as it sought to raise further finance.

Locked in

Facebook has been caught in a storm of selling since its shares started trading on the open market four months ago.

The company's stock has fallen by half since going public at $38 (€30.50) a share. It fell a further 1.85pc to $19.64 (€15.75) in New York yesterday.

That near-50pc drop has hit a number of investors, including Bono's private equity fund Elevation Partners, which held a stake worth as much as $1bn when the company went public.

Elevation sold shares worth some $175m (€140m) at the initial public offering but still holds a substantial stake in Mark Zuckerberg's company.

Despite the fall in value, Elevation's stake is worth an estimated $750m (€600m) and still represents a huge profit for Bono and Elevation's other partners, as well as the investors who have backed the company.

The past week has been especially difficult for Facebook, as it has seen the first wave of so-called "insider shares" come on the market since May. These were owned by investors who bought into Facebook when it was still a private company.

Under market rules, those shares could be sold at the initial public offering but were then 'locked in' for several months. Now those lock-in periods are beginning to end.

Some 271 million of these insider shares started trading last week and as many as 1.4 billion shares will come on the market between now and November.

Irish Independent

Also in Business