Market manipulation for FB

Not in any way that the SEC would disapprove, but Mark Zuckerberg has vowed not to sell any of his Facebook stock for one year. A very noble sentiment, surely, since the stock has plummeted below $18 today?

Well, let's do the math. Facebook's market cap is $37.9bn with about 2.1bn shares. A lot of these (at least half?) will be held by current FB employees, as anyone holding FB with an ounce of common sense has already sold up. Zuckerberg holds a total of 500mm shares (444mm + option on 50mmm), about 1/4 of the current total. If I were Zuckerberg, I'd be taking a careful look at current share values and trying to work out how I could boost the share price in the next 12 months on a relatively low volume, then try and sneak out as many shares as possible before the price collapsed.

There's also the point that FB options will be the only thing holding a lot of his top Palo Alto-based developers in the company - if they leave, they forfeit the unvested shares. If the value of those shares drops sufficiently, they'll head off to Apple / Google / Internet startup of choice, and FB will grind to a halt.

Just to recap, Zuckerberg holds 25% of all FB shares, with a current valuation of about $9.5bn, and no doubt a huge tax bill heading his way with no hope of getting much back in future years from offsetting FB capital losses. At this point, his best option is to try to escape with a few $bn before the whole thing collapses in a puff of dust.

Or he could get Facebook to start making money. Good luck with that...

Update: after thinking about this a bit more, I can't see Zuck ever raising more than a small fraction of his nominal wealth in cold hard cash; he has far too large a holding in FB to sell off much of it without causing demand to collapse. This hold-for-one-year announcement seems more like Zuck doing his damndest to keep FB's engineers hanging around long enough for Microsoft or some similar deep-pocket entity to buy out FB entirely. That's the only way Zuck's going to see more than a few billion of his paper wealth.

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