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The social network outlined a number of events in a fresh 8-K SEC filing. One of the more relevant disclosures was that Zuckerberg has committed to holding all of his existing shares, all 444 million Class B shares and 60 million Class B shares issuable from options, for at least 12 months. Two other directors, Marc Andreessen and Donald Graham, also said they have no intention to sell any shares other than to cover certain tax liabilities.
That's three big votes of confidence from insiders who are willing to stand pat on their Facebook positions as the stock continues to hit new lows and other insiders are cashing out, most notably Peter Thiel and Dustin Moskovitz. Don't forget that Zuckerberg did cash out a little over $1 billion through the IPO already, so I don't think he's at risk of not being able to pay his electric bill anytime soon.
The company also made two other important moves that are clearly aimed at supporting the share price, since their continued weakness is weighing on internal morale. Facebook will be effectively buying back roughly 101 million shares while simultaneously waiving the "market stand-off" provisions that employees are subject to that previously prevented them from selling shares until the next lockup expiration on Nov. 14.
The company is moving up employees' eligible sale date forward by a few weeks and estimates that on Oct. 29, there will be a total of 234 million shares held by employees that will be eligible for sale.
By reducing the number of shares trading while spreading out the number of shares that might be unloaded, the hope is to help provide some support for the share price. It's a temporary move aimed for short-term stabilization. This does nothing to address longer-term fundamentals or strategic direction, though.
Facebook still needs to sway advertisers away from Google
For more on Facebook's prospects, don't miss this premium report all about the social network. I've outlined the major opportunities and risks facing the company, as well as what it would take before I'd recommend buying shares. Grab your copy today and get free updates!