Facebook Inc (NASDAQ: FB)
Things are starting to get a bit concerning for shareholders in the world’s largest social network. While Facebook’s stock seems to be growing, insiders seem to know something that the vast majority does not. I say that because they are unloading shares left and right. In fact, recently we’ve heard about two big insider sales. Today, we’ll talk about why it’s important to watch insider sales, the two big insider sales we’ve seen recently, and what we can expect to see from FB moving forward.
Why It’s Import To Watch Insider Sales
Insider sales are incredibly important to watch for a good reason. Ultimately, insiders know quite a bit more than the average investor. As a result, we generally watch the news surrounding the companies they are involved in. If they make big purchases, investors generally know that they can expect to see something positive coming down the road. Adversely, when insiders made large sales, this can be a sign that something bad is coming.
Facebook Insider Sales Are Becoming Concerning
As mentioned above, when insiders make large sales of their stake in a company they’re involved with, it could be a sign that something negative is on the way. In the case of FB, we’ve seen two big insider sales in a relatively short period of time. Here’s what we saw:
- Marc Andreessen – Marc Andreessen is a venture capitalist and board member at Facebook. Recently, he’s been on a selling spree, offloading the vast majority of his stake in the company. The selling spree started on October 30th; To date, he has sold 1.5 million shares, a total value of $160 million and an amount that equates to more than 73% of his total stake in the company.
- Jan Koum – Jan Koum, Facebook director, seems as though he’s got some concerns of his own. On November 16th, Koum offloaded a big portion of his stake in the company as well. On that day, he sold 2,808,522 FB shares in a transaction totaling $286,525,414.44.
Why Are Facebook Insiders Selling Their Stake?
This is the big mystery. From everything I’ve seen surrounding the company, things are going incredibly well at Facebook. Quarter after quarter, FB is producing solid earnings, solid growth, and the company is venturing into areas outside of social media that could prove to be profitable. However, some have been concerned that Facebook has already saturated the market and that from here, it’s going to be nearly impossible for the company to grow at an impressive rate. While I don’t believe that to be the case, it could be seen as a valid concern. One thing is for sure, insiders are offloading quite a bit of their shares and that is concerning to the fundamental investors out there.
What We Can Expect To See From Facebook Moving Forward
Recently, I’ve had a relatively bullish opinion of FB. While that opinion hasn’t changed quite yet, I have to say that I’m growing more and more concerned with insider sales. If these big sales continue, it may be a sign of bad things to come for the stock. At this point, if I was asked, I would rate the stock a hold until we figure out exactly what’s going on.
What Do You Think?
Where do you think FB is headed moving forward and why? Let us know your opinion in the comments below!
[Image Courtesy of Flickr]