CEO suspected of insider trading after mass sell-off of stock by top executives exposed
After Facebook share prices plummeted this week, in what some are dubbing “the biggest stock collapse in history,” evidence has emerged that founder Mark Zuckerberg and other key executives sold-off billions of their own stock shortly before prices fell.
Values of the social media giant took a battering on Wednesday when the company revealed their smallest ever growth figures.
The slow in the firm’s growth has been caused by less new users signing up for new accounts whilst the number of current users closing their accounts has increased.
These growth figures have been attributed to the recent Cambridge Analytica scandal and Facebook’s recent censorship campaign that has cut visibility of conservative content whilst helping to promote liberal news outlets.
Facebook’s practices have led to a growing amount of distrust among the public, especially among early adopters of the platform who are now walking away in record numbers.
Insider trading at Facebook
The announcement of the disappointing growth figures caused shareholders to jump ship, with stock prices crashing as a result.
To put the value of the $150 billion crash in perspective, Facebook lost more in one day that the entire value of Bitcoin, which currently stands at $141 billion.
With Zuckerberg and other insiders aggressively selling their own stock ahead of the announcement, which would certainly crash the value of the company, key executives are now suspected of insider trading.
The discovery has now prompted calls for a full investigation into Zuckerberg and top Facebook shareholders by the SEC.
According to Zero Hedge, Dennis Gartman issued a very prescient and timely warning ahead of Facebook’s earnings.
As we noted yesterday in our note why Gartman thinks that this is a “This Is A Dangerous Time“, the (formerly) regular CNBC guest pointed out the following troubling fact:
… note the chart this page, courtesy of RBMP Capital, of the huge and increasing sales of Facebook by its founder, Mr. Mark Zuckerberg, over the course of the past several years and most notably over the course of the past several months.
When owners sell this aggressively… no matter what the excuse they might give…only the foolhardy do not pay heed.
Today, Gartman understandably takes a victory lap, and writes the following:
Facebook closed at 4:00 p.m. at a new all-time closing higher of $217/share, but when the news came out if fell swiftly to $173/share… a loss of just over 20%!
This is fascinating in light of the massive “insider selling” of Facebook shares by non-other than Mr. Zuckerberg himself in recent weeks and noted here yesterday.
As a reminder, Facebook’s crash overnight has been so massive, at one point the total value lost was over $150 billion, greater than the market cap of bitcoin, making it the biggest stock collapse in history.
Bloomberg has also picked up on this insider selling deluge, and writes that “nine Facebook insiders combined to sell about $4.13 billion worth of stock since the Cambridge Analytica data-mining scandal first surfaced on March 17.”
Chief Executive Officer Mark Zuckerberg accounted for 85 percent of the total, according to data from InsiderInsights.com, which analyzes such transactions.
The social media giant’s stock fell as much as 24 percent in late trading Wednesday after second-quarter sales and user growth disappointed investors.
The acceleration in selling is notable because as Gartman, and we, showed yesterday, that compares with $4.31 billion in all of 2017.
And while the traditional excuse is that “the sales were part of pre-determined trading plans” the sharp acceleration in 2018 selling, and especially in recent months, should raise some eyebrows, perhaps those of the regulators, because as Gartman – who will have the last words – writes:
“The selling was of such massive size and such recent hurried nature that one had to take note of Zuckerberg’s liquidation as a clear indication of future potential problems.
“Those problems were made clear last evening. The SEC may want to take a look!”
Then again, with everyone’s pension invested in Facebook in some capacity, the last thing the SEC will dare to do is cause a market “event” by taking a close look at the one company in which as of last quarter seemingly everyone was invested…