Former Goldman Sachs Analyst: ‘Facebook Insiders Hate Their Stock’

Journalist:
Kiril Nikolaev @kirilnikk123
September 30, 2019

Facebook (FB) has been in a bull market ever since it took out resistance of $40 in August 2013.

The strong uptrend catapulted the equity to an all-time high of $218.62 in July 2018. That’s an impressive growth of close to 450% in five years.

Since then, the security has been correcting. The significant pullback is making many investors jittery.

Veteran trader turning bearish on FB as the stock is close to losing its 200-day moving average. | Source: Twitter

It appears that it may be time to dump FB shares. A former Goldman Sachs employee revealed that Facebook executives have already sold a ton of shares.

C-Level Executives Dumped Millions of Shares in September

September was another month of profit-taking for Facebook. However, what’s out of the ordinary this month is that the social media giant’s executives were the ones selling shares.

Will Meade, a former Goldman Sachs analyst, took to Twitter to reveal how Mark Zuckerberg, Sheryl Sandberg and David Fischer sold millions of FB shares in September.

Facebook CEO Mark Zuckerberg led the charge in dumping his company’s shares last month. | Source: Twitter

We did the math and discovered that these three executives sold over 2.24 million shares to the tune of more than $418 million. Zuckerberg himself dumped over 2 million shares and gave himself a nice profit of $396 million.

Sheryl Sandberg, the tech giant’s chief operating officer, sold 110,000 shares for a nice $20 million profit. Last is Facebook’s chief revenue officer, David Fischer, who sold 12,267 shares for a take home pay of $2.25 million.

While firm execs selling shares is not necessarily a red flag, you should worry when CEOs of other companies are doing the same thing.

In August, Yahoo! Finance reported that CEOs and other insiders sold $866 million worth of equities per day on average. In addition to Mark Zuckerberg, other top honchos who parted with their shares are Amazon’s Jeff Bezos, Apple’s Tim Cook, Slack’s Stewart Butterfield and Netflix’s Reed Hastings.

It appears that there’s an emerging trend of chief executives cashing out. If you’re still holding Facebook shares, you should weigh just how much upside is left in the stock. This suggestion comes after talking to a market analyst.

Facebook Is Trading Dangerously Close to Its Range Support

We talked to Milan Vaishnav, CMT, a technical analyst at Gemstone Equity Research. While the analyst remains upbeat about the stock’s prospects, FB is now close breaching key support areas. Mr. Vaishnav said,

In the near term, the stock is expected to oscillate within a range of 176-191. An upward directional move will occur only after the level of 50-DMA is taken out which is presently at 192.11. On the lower side, the stock enjoys strong pattern support at 177 and at 169.68 which is the 200-day moving average.

He added,

The stock has been marking lower tops while the RSI has not done so. This shows some resilience in the stock and some upward momentum towards its resistance area of 192 cannot be ruled out.

Thus, according to the analyst, Facebook is looking at an upside of about 8%. That doesn’t seem like there’s a lot of gains to be made considering that executives are now dumping shares.

This article was edited by Sam Bourgi.

Last modified (UTC): October 3, 2019 11:16

Tags: facebook
Kiril Nikolaev @kirilnikk123

Kiril is a CFA Charterholder and financial professional with 5+ years of experience in financial writing, analysis and product ownership. He has a bachelor's degree with a specialty in finance and lives in Canada. Kiril’s current focus is on cryptocurrencies and funds, as he does his own crypto research and is a Product Manager at Mitre Media. He also has his personal website, InvestorAcademy.org where he teaches people about the basics of investing. He owns Bitcoin, Ethereum, and other cryptocurrencies. He holds investment positions in the coins but does not engage in short-term or day-trading. Follow the author on Twitter @kirilnikk kirilnikk123@gmail.com