Facebook (FB), Zuckerberg to Sell 70 Million Shares in Secondary Offering

Shares of Facebook Inc. (FB) were down -0.52 or -0.94 percent to close at $55.05 per share on Thursday, after news that the company and its founder, Mark Zuckerberg would be selling shares in a secondary offering valued at $4 billion. The sale will be the first for the company since its initial public offering last year. The offering was announced just before Facebook becomes a component of the S&P 500 and will be sold primarily to index funds that have their portfolios tied to the S&P 500 index.

CEO and founder Mark Zuckerberg is selling the lionâ s share of the offering of Class A shares and will buy more Class B shares that have more stockholder voting weight. Facebook will be added to the S&P 500 Index after the close on Friday.
Menlo Park, California based Facebook was founded in 2004 by Zuckerberg and four roommates from Harvard. The original social networking service was started for Harvard students but subsequently expanded to other colleges in the Boston area, eventually allowing anyone claiming to be over the age of 13 to become registered users. The company had income of $5.1 billion in 2012 with over 1 billion registered users. The secondary offering announced through a filing made yesterday with the SEC, will have Facebook selling a total of 27,004,761 shares of its Class A common stock. CEO Zuckerberg, will be selling 41,350,000 shares of Class A stock while Venture Capitalist Mark Andreessen will sell 1.6 million shares. At Wednesdayâ s closing price of $55.75 per share, the offering is worth almost $4 billion. In addition to the sale of Class A shares, Zuckerberg is exercising an option to buy 60 million shares of Class B shares, which have 10 votes per share, versus one vote for Class A shares. The majority of proceeds from Zuckerbergâ s sale of Class A shares will go to pay taxes on the option exercise. In related news, Zuckerberg announced he would be donating another $1 billion or worth (18 million shares) of Facebook stock to the Silicon Valley Community Foundation. The donation is the largest the Foundation has ever received and reiterates Zuckerbergâ s pledge to spend half his wealth on philanthropic endeavors. Facebook is taking advantage of its high share price, which made an all-time high of $55.89 on Wednesday. The stock traded down to $18.05 back in August of 2012, after the company went public in February at $38 per share. At its current level, the stock is 44 percent higher than the IPO offering price. The price and date for the secondary offering has yet to be determined and will be underwritten by JP Morgan (JPM), BofA Merrill Lynch (BAC), Morgan Stanley (MS) and Barclays (BCS). While Facebook shares initially dropped sharply on the news yesterday, the stock recovered most of its losses by the end of the day. With Facebook stock and the S&P Index both at all-time highs, the secondary offering could set off a corrective decline in the stock. Other News About Facebook Facebook Releases 'Dislike' Button That Will Satisfy No One Facebook released a dislike button..but will it live up to everyone's expectations? Users balk at 'intrusive' Facebook video ads Facebook unveils video ads on select users' News Feeds. Other Stocks in the News Apple's Sudden Urge to Splurge Apple has bought 15 companies in 2013. The Cult of Vitamix Pricey blender maker has gained a cult following. Copyright 2013 by InvestorGuide.com, Inc. InvestorGuide has no control over the sites we link to, is not affiliated with these sites, and cannot take responsibility for their quality or suitability. The news, analysis, commentary and profile information is not meant to be comprehensive, and the data provided is not guaranteed to be accurate. WebFinance Inc., the publisher of this newsletter, is not a registered investment advisor or a broker/dealer. This is not a stock recommendation newsletter but rather a source for investment ideas, and we encourage you to fully research any company before considering investing. The opinions expressed herein are those of the author and do not necessarily represent the views of nor are they endorsed by WebFinance Inc. No employee of WebFinance has owned or currently owns any shares in the company described above. The above is neither an offer nor solicitation to buy or sell any securities. The trading of securities may not be suitable for all potential readers of this newsletter, and the purchase of stocks mentioned in this newsletter may result in the loss of some or all of any investment made. We recommend that you consult a stockbroker or financial advisor before buying or selling securities or making investment decisions. We are not responsible for claims made by advertisers and sponsors. Anyone who makes decisions based on what they read here does so at their own risk and cannot hold WebFinance Inc. (DBA InvestorGuide.com, Inc.) or its employees responsible.

Published on Dec 20, 2013
By Jay Hawk
Jay Hawk
Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.

Copyrighted 2020. Content published with author's permission.

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