Facebook and Mark Zuckerberg Sell, and So Does Wall Street

After a nice run on the Nasdaq, Facebook and its CEO are selling a big block of shares. Wall Street’s reaction: We’re selling, too.

Facebook says it is planning a secondary sale of 70 million shares, which at yesterday’s closing price would be worth about $3.9 billion. Investors are using the news as a reason to move their own shares, so Facebook’s price has dropped by as much as five percent in pre-market trading.

As I’m typing this, FB is down around 2.5 percent, which means Facebook’s market cap has dropped by something like $3 billion this morning. Facebook shares had started out 2013 below $30, but went on a huge run this summer, when Wall Street became convinced that the company had a mobile plan, after all. Now they are in the mid-$50s.

My gut is that the shares will stay there today, because once you look at the breakdown of today’s sales announcement, the news looks less dramatic.

The gist:

• Mark Zuckerberg is selling 41.4 million shares, but the majority of that is to pay for taxes on 60 million shares he is acquiring via stock options. Separately, he is giving away 18 million shares to the Silicon Valley Community Foundation, the nonprofit he uses to handle most of his charitable giving.
• That is: While Zuckerberg will end up pocketing $33 million, his overall stake in Facebook is barely changing, and he’s donating $1 billion to charity.
• Facebook itself is selling almost all of the remaining shares in the offering. It will sell 27 million shares, worth about $1.5 billion. It says it doesn’t have any specific plans for the money, but allows that it might use some of it to go shopping: “We may use a portion of the proceeds to us for acquisitions of complementary businesses, technologies, or other assets.”
• Marc Andreessen will finally have some walking around money, too. He’s selling 1.6 million shares, worth around $88 million.

To sum up: Mark Zuckerberg will give $1 billion to charity, Facebook will have some more cash to fund “acqhires,” or build more data centers in the Arctic Circle, or whatever, and if you bought Facebook shares in January of this year, you’re still way ahead of the game.