We’re all familiar with Facebook founder, Mark Zuckerberg. He’s the proud brand ambassador, who has been running the company since 2004. But recently there has been some buzz around the tech mogul, namely – why is Zuckerberg selling his shares?
Speculation has been stirring that the 37-year old entrepreneur is winding down his majority stake in the social media giant. So much so, that it has been projected that over the course of the next few years Zuckerberg could be offloading around 75 million of his shares – worth around $13.4 billion in total, as per SEC filings.
The sale of shares began back in 2017 and this is not the first time that Zuckerberg has opted to sell off his stake. Since Facebook listed in 2012, it has emerged that the executive has unloaded an estimated 43 million of his shares.
But, why? Despite the news instigating a flurry of anxious conjectures and assumptions, this is still an unanswered question. In the past, Zuckerberg has sold his shares to pay for taxes. Yet, this time round, the social media boss has reassured investors and employees alike that he will remain in control of the company at all times, leaving many wondering what could be the driving force behind such a decision.
Analyst and economist, John Anderson, expressed his opinion, “There may be a sense of readiness to focus on philanthropic developments or, perhaps, in Zuckerberg’s mind, maybe he is just looking for a fresh challenge or undertaking a huge shift in investment focus. After all, it may be a strategic move; he did suggest investing heavily in augmented reality and virtual workplaces, as well as building an alternative to the regular Internet.”
Meanwhile experts suggest it could be quite a financially savvy decision. For instance, market analyst, Doug Ramirez argues, “It seems he may be taking advantage of a market opportunity. If he is aware of what could potentially be a crisis moment for the stock market, this maneuver could help to free up some of his assets to later shore them up in a different investment vehicle or simply have some liquid funds readily available.”
In any case, these are only assumptions as neither Zuckerberg himself nor Facebook have commented on the matter.
Are There Unspoken Motives?
That being said, there are some underlying motivations behind the Facebook boss’ share sales that could lie below the surface. This could include a desire to reduce his exposure to the company’s risk, as well as diversify his personal portfolio. But there is also the premonition that Zuckerberg could be looking to slowly exit from his long-standing position within the business.
This idea is confirmed by other expert/s. “I think it’s very possible that he is looking to move away from Facebook, which is already beginning to see notable competition from both Google and major US tech players.”, comments tech guru and leader in business analytics, Jonathan Bell. “You have to remember that Zuckerberg has managed to stay relatively insulated from criticism and public opinion in the past, so I think now he may be feeling the strain of it all and actively looking to mitigate his involvement”.
It is worth noting that, Zuckerberg’s selling off of his shares does not represent the solidification of a severe business contingency or a freeze of activity. No, this move looks more like it is underpinned by Mark’s desire to control his level of risk, diversify his wealth, and detach from a business that he has intimately been a part of for nearly seventeen years.
Altruistic Opportunities
Moreover, Zuckerberg has made clear that he intends to use a portion of the proceeds to fund philanthropic needs. For example, he plans to launch a new social media platform, the aptly named ZuckNet, a non-profit online network that focuses on helping the less fortunate. He also plans to launch virtual internships to reach the most isolated communities across the world.
While no specific timeline has been announced, investors have started to speculate on which project he will focus on first. In the coming months, Zuckerberg is expected to make an announcement regarding his goals and plans, which will allow investors to plan accordingly.
What is also evidence that all of this is part of a larger picture is Zuckerberg’s statement that he plans to donate the majority of his wealth to charitable causes such as curing diseases, education, poverty and healthcare. Besides this, the chief executive has publicly stated that he does not support active politics and has distanced himself from any external lobbying efforts.
An Internal Or External Matter?
From an internal analysis point of view, other experts suggest that the sale of shares could reflect certain tensions between executive management and Zuckerberg. “It’s quite possible that Mark is sensing an increased pressure from within Facebook – stemming from the added scrutiny and mounting competition. So this could be a calculated attempt to reduce volatility in leadership decisions,” says Michalle Wilson, a business strategist.
On the flip side of the coin, some believe that the CEO might be looking to offload his stake in a bid to reach out to external investors. “The sale of these shares could indicate a subtle transition process of Zuckerberg to focus on external investors, as well as customers. This would make sense, as Facebook has been facing criticism in the past for not having an adequate level of transparency into the company’s operations and decisions,” further speculates Wilson.
In support of this theory, Zuckerberg’s personal records and consulting firm filings show that he has increased his spending on personal advisors, consultants, and other outside parties. So it appears that, this approach is designed to make Facebook more investor-focused and increase the visibility of the executive’s decision making process.
Can A Balance Be Reached?
If Zuckerberg is indeed seeking to maintain investor neutrality and decrease his personal exposure, this could be a huge breath of fresh air for the company. During the past four to five years, Facebook’s stock price has decreased. Subsequently, this has caused the company to operate with a cagier footing, leading to a continuous decline in value. Therefore bringing more stability and less volatility to the table could be something that Facebook – and its shareholders are longing for.
By having a tighter grip on corporate transparency and insights, as well as more representation from external investors, some experts suggest that Facebook could become a better, more efficient, and more competitive business. It may also assist in decreasing backlash from public opinion.
Moreover, from Mark’s perspective, this could mean having optionality, if he needed to exit from the business or make a different, entrepreneurial pivot.
A Brave New World Awaits
All in all, one thing is for sure – the selling of shares signals an interesting shift in Zuckerberg’s vision for the future. The question is, how will this decision impact the current state of play from a business and strategic standpoint?
Regardless of the motivations, it’s clear that the Facebook boss is aiming to remain in control of his fate, while preventing any turmoil within the organization. Should this prove to be a successful move, one thing is certain, a golden future awaits.
What Lies Beneath?
Meanwhile, deeper concerns remain about how Zuckerberg’s share sales may affect the company’s bottom line. Insiders have raised the possibility that this could reduce his overall vision for the organization and lead to layoffs. This could leave many current staff members feeling unsettled.
At this point in time, it is difficult to understand the full implications of such a step, and what the news means for investors and current employees. For the time being, shareholders are more likely to keep a close watch on the unfolding matters related to Zuckerberg’s decisions.
Alternative Investment Possibilities?
Alternatively, some fear that the executive may opt to diversify his wealth portfolio, in order to spread his risk and possible future losses. This could involve investments in different products, such banking and technology, or maybe even branching out into foreign markets.
Further to this, Zuckerberg’s move to offload his shares may be an expression of doubt or disillusionment with the current stock market conditions, and an attempt to find an alternative safe haven for his wealth. If, however, this does not materialize, his decision could be deemed a failure, with analysts speculating the losses could potentially be massive.
Auditing Political Movements
Something else to consider is that, Zuckerberg’s attempts to become more transparent, when coupled with his distancing from active politics, may be a brilliant piece of political maneuvering. This could enable Zuckerberg to maintain his neutrality, while also avoiding any criticism.
On the other hand, there is a risk that the Facebook founder’s departure from public discourse and corporate transparency to could lead to a break down in communication, which could have further repercussions. This means that it may be the case that regardless of his motives, his resignation could be seen as a ‘lose – lose’ situation; leading to further damage to his existing public image.
A Final Word
So as we can see, it is hard to know for sure why Zuckerberg is selling his shares. Yet as the tech mogul’s decision continues to unfold, it has become clear that the future of both Mark and the company he founded, depend on his savvy and timely actions.
While Zuckerberg’s actions remain open to interpretation, his success will be determined in the months and years ahead, as the unknown potential of his chosen path is revealed.
