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Executives showing confidence in Facebook may reassure weary investors
While some investors may have sold their Facebook stock as soon as they could, at least a few executives have announced that they will not be selling of their shares, in an attempt to show that they still have confidence in their company.
Mark Zuckerberg will not be selling his Facebook shares for at least a year, according to an 8-K filed Tuesday with the Securities and Exchange Commission.
“As of the date of this report, Mark Zuckerberg … has informed us that he has no intention to conduct any sale transactions in our securities for at least 12 months,” Facebook general counsel Theodore Ullyot said in the filing.
Zuckerberg holds roughly 444 million shares of Class B common stock as well as 60 million shares of Class B common stock issuable upon the exercise of an option.
Facebook also announced in the filing that it would be paying off its restricted stock unit (RSU) tax bill of around $1.9 billion with “existing cash and borrowings from our credit facilities” rather than by selling off shares.
“We currently do not expect to conduct any offering of our equity securities near the initial RSU settlement date to fund this obligation, nor do we currently expect to conduct an offering in connection with the expiration of “market stand-off” or “lock-up” restrictions in the fourth quarter of 2012.”
“This essentially amounts to a buyback of 101M shares totaling $1.8B at current prices, and it will reduce the outstanding share count by ~3.7%,” wrote Doug Anmuth of JP Morgan Chase.
Two Facebook directors, Marc Andreessen and Donald Graham, announced that would be selling off some personal stock to pay their RSU tax bill, but that they will not be selling off any shares beyond that.
Facebook also waived a market stand-off provision that would have prohibited comoany employees from selling shares until November 14. Instead, employees will be able to sell their shares on October 29. Roughly 234 million shares will be eligible for sale.
The intention of Zuckerberg, as well as the two directors, to hold on to their stock has already appeased some of the company’s underwriters, as this points to executives at Facebook have true confidence in the company. The news in the filing may have already begun to ressure investors.
“The Street has been heavily focused on the large lock-up expirations coming in October and November, and we believe the combination of taking Mark Zuckerberg’s shares out of that equation and also shrinking the outstanding share count by 101M shares (~3.7%) shows management's confidence in Facebook’s long-term story,” wrote Anmuth.
Facebook stock hit a new low of $17.55 on Tuesday before closing at $17.73. The stock rose 1.98% in after-hours trading, to $18.08 after this news broke.
Read the entire filing below:
(Image source: csmonitor.com)
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