Background Information
Mark Zuckerberg is an American technology entrepreneur and philanthropist. He is the co-founder, chairman, and chief executive officer (CEO) of Facebook, Inc. Zuckerberg is considered a “self-made billionaire” since he is independently wealthy and not dependent on family wealth for his success. As of 2020, he is the fifth-richest person in the world according to Forbes, with a net worth of nearly $ 72 billion.
Facebook is the biggest and most popular social networking service. It is listed on NASDAQ as ‘FB’ and was founded in 2004. It became a public company in May 2012 and its stock has been a Wall Street darling ever since. As of mid-2020, Facebook is now worth more than $ 680 billion – 13 times more than when it first went public.
Mark Zuckerberg owns more than 409 million shares of Facebook stock, which is more than 13 percent of all Facebook shares outstanding as of May 2020. This is a higher percentage than his ownership percentage was even in early 2018, which was around 11 percent. In addition to his 409 million shares of Class A Facebook Stock, he also owns around 123 million shares of Facebook’s Class B stock.
In 2017, the company revealed in a filing that Zuckerberg had earned about $ 3 billion in additional stock due to an earlier “incentive plan.” It was the biggest year-over-year benefit from the plan. As of March 2018, Zuckerberg owned about 421 million shares of Facebook Class B stock, worth about $ 75 billion.
Zuckerberg’s stake in Facebook is worth about $ 50 billion today, making him the second richest person in America, behind Amazon’s Jeff Bezos. But it could be worth much more or much less depending on the stock price. Since the company went public in 2012, the stock has surged more than 700 percent and more than doubled the return of the S&P 500 during the same period. However, shares have taken hits in the face of controversies, regulatory investigations, and slowing user and ad growth.
The Impact Of Takeover Speculation
It is worth noting that Zuckerberg has a great deal of influence due to his large ownership of Facebook. Whenever talks of takeover of Facebook by another tech giant come up, Zuckerberg’s ownership share becomes a major point of contention. For example, when Microsoft was in talks to buy out a major part of Facebook for $ 15 billion in 2006, Zuckerberg almost walked away from the deal due to the clause that required him to transfer a majority of his shares as part of the deal.
Insights From Experts
According to Jaimie Cutts, a Forbes contributor, “Given the divergence between Zuckerberg and his board over his plans to increase spending at the expense of shareholder profits, it’s not surprising that critics have suggested Zuckerberg should have less voting control of the company relative to his stock ownership. But there’s some support for allowing Zuckerberg to retain his voting privileges, given that the core of the business is focused on harnessing the good knowledge and experience of its founder and leader.”
Our Insights and Analysis
Mark Zuckerberg’s control and influence over Facebook is an important factor in understanding the stock price and overall performance of the company. His large ownership stake makes him the decisive factor in any takeover speculation. As long as he holds a majority of the stock, it is unlikely that any other outside party can take control of Facebook without his approval.
At the same time, it is key to remember that Mark Zuckerberg is focused on the long game when it comes to Facebook. He is willing to make investments and sacrifice short-term profits in order to achieve the long-term goals of the company. On the flipside, shareholders sometimes panic when they see the stock price dropping, which reflects Zuckerberg’s lower priority for short-term profits.
Zuckerberg’s ownership of 409 million shares in Facebook significantly impacts value of the company. His ownership is worth billions of dollars and continues to steadily rise, albeit at a slower pace than in previous years. As long as the stock price remains relatively stable, the value of his stock will increase.
His 401 million Class B shares give him additional voting powers which will allow him to maintain his firm hold over the company. He is expected to retain his majority voting shares in the future too. As such, Zuckerberg’s ownership of shares will continue to grow and remain a major factor in the success of Facebook.
Reinvestment Of Funds In Facebook
Over the years, Zuckerberg has frequently reinvested large sums in Facebook by buying shares on the open market. In May of 2011, he purchased 60 million Class B shares for a total of $ 9.99 billion. In 2013, he bought an additional 40 million Class B shares for a total of $ 3.8 billion. He made two large purchases in 2014 and 2015, buying a total of 60 million additional shares for a combined $ 8.2 billion. Finally, in 2016 he made another small purchase of 6 million shares worth $ 0.9 billion.
The sheer size of Zuckerberg’s purchases show just how much faith he has in the future of Facebook. He has continuously put his money where his mouth is when it comes to the company. This strategy of reinvestment has allowed him to continue to increase his ownership stake in the company, making him even more influential.
Stock Volatility
Despite its current success, Facebook has faced a number of issues over the years, often linked to misuse of its platform by malicious users or entities. These issues have had a significant effect on the stock price, often leading to a drop in value. Zuckerberg’s large number of shares exposes him to large losses when the stock price drops due to external shocks such as those mentioned above.
On the flip side, the stock is also highly volatile, meaning that it can rise quickly as well. When the stock does rise, Zuckerberg stands to benefit in a big way since he owns so many shares. That said, due to his investments and long-term strategy, it is likely that he will continue to benefit from Facebook’s stock price in the future.
Influence Over Other Stakeholders
As the largest shareholder in Facebook, Zuckerberg has a powerful influence over the decisions made by other shareholders and the board. This influence is especially important with regards to corporate strategy, as Zuckerberg is the main architect behind Facebook’s success. As long as he can continue to effectively drive the company’s strategy, his ownership stake will remain a major factor in the company’s performance.
Zuckerberg has been able to exploit his large stake in the company to further his own goals and the goals of the company. He has used the money to fund his philanthropic efforts and also to expand Facebook’s reach and services to more and more people. As such, his ownership of shares is seen as an important factor in Facebook’s overall success.
Tax Consequences
As a result of his large ownership stake in Facebook, Zuckerberg is subject to different types of taxes. The most significant is the capital gains tax, which applies to profits earned from selling securities. Due to his potential to sell off a large portion of his shares, he is likely to owe a significant amount of capital gains taxes in the future.
In addition to capital gains taxes, Zuckerberg is also subject to income taxes due to his ownership of stock. Although the amount of income he earns from the sale of stock may not be large in comparison to the amount he earns from his salary or other sources, the taxes he has to pay still add up. Therefore, it is important for him to be aware of the tax implications of his ownership of Facebook stock.
Conclusion
Mark Zuckerberg’s ownership of 409 million shares of Facebook stock is key to understanding the company’s performance and stock price. His large stake has allowed him to influence corporate strategy and further the goals of the company. He has also used the money to further his philanthropic efforts and expand Facebook’s services. Last but not least, his ownership of stock has resulted in significant taxes on his part due to capital gains and income taxes.
