·
Zuckerberg unloaded 30.2 million shares on Friday
·
Facebook founder made $1.13 billion on the sale
· Zuckerberg had saved himself $174 million by
Wednesday
MARK Zuckerberg and leading Facebook investors cashed out millions of shares before the price dropped off a cliff, according to company filings.
MARK Zuckerberg and leading Facebook investors cashed out millions of shares before the price dropped off a cliff, according to company filings.
It was also revealed a
company executive issued a warning days before the initial public offering that
Facebook's revenues were lower than expected, information that would have
almost certainly reduced the opening price of the newly floated stock.
The new reports are
already raising questions about whether top investors profited from
the IPO at the expense of smaller buyers.
Shareholders filed a
lawsuit against Facebook and the banks behind the company's stock,
Morgan Stanley and Goldman Sachs, yesterday.
Both the US Securities
and Exchange Commission and the Financial Industry Regulatory Authority are
looking into the matter.
The US Senate Banking
Committee has also launched an inquiry and the state of Massachusetts has
subpoenaed Morgan Stanley. Facebook stock rose 3.3 per cent yesterday, to $32 a
share. But a new analysis said the stock could fall as low as $9.59.
That would be a far cry
from the $37.58 Zuckerberg fetched for the 30.2 million shares he unloaded on
Friday.
The founder of the
social networking website made $1.13 billion on the sale.
By Wednesday the price
had dropped to $31 - meaning that Zuckerberg had saved himself $174 million.
The 28-year-old still
holds a vast amount of Facebook stock but his decision to sell off so much will
leave investors wondering about his confidence in the company.
The drop is based around
the realisation Facebook might not be growing as quickly as
initially thought.
And second-quarter
growth will likely fall short of expectations as fewer new users join the
social networking giant.
Shareholders filed a
lawsuit yesterday, alleging Zuckerberg, Facebook and the banks that backed the
IPO, Morgan Stanley and Goldman Sachs, knew this information.
On Wednesday it was
revealed the banks' analysts downgraded their estimates of future earnings
while they were rolling out the IPO.
Business Insider
reported the banks revealed to privileged major investors the share price was
likely to tank, but left smaller stock buyers in the dark.
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