back to article PayPal co-founder sells out of foundering Facebook at VAST profit

One of Facebook's earliest investors has sold around $400m worth of shares in the company – which has seen its value halved since going public in May this year. PayPal co-founder and Facebook director Peter Thiel and his venture capital firm, Founders Fund, cashed out most of his stock (about 20 million shares) in the dominant …


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  1. Ol'Peculier


    Most of the Tesco Express shops are leased, and they have "Eddie" driving all their lorries.

    Just sayin'...

  2. Peter Clarke 1


    Just who is buying these shares now the price has plunged? Are they expecting a rally on the price or just getting razor thin margins when selling on?

    1. Code Monkey

      Re: Puzzled

      There must be some fools left who weren't parted from their money at the IPO.

    2. Grikath

      Re: Puzzled

      Short answer: Short sellers...

      1. Thomas Whipp

        Re: Puzzled

        ummm no, short sellers are selling - the clue is in the name!

        1. Anonymous Coward
          Anonymous Coward

          Re: Puzzled

          "ummm no, short sellers are selling - the clue is in the name!"

          Shorts 101. A short sale is done on "borrowed" shares on the assumption that the stock price will go lower. As such a short seller borrows shares and sells them at the current price with the promise to return the shares at a later date in the hope that the price will be lower when that time comes. So short sellers who sold early got very near the IPO price and are buying shares now to return those which were borrowed previously. Effectively they have doubled their money on the FB IPO but with the risk that if FB had been spectacular the potential losses would be nearly limitless. Contrast that with a "long" who can only lose their initial investment.

          Be sure to tune in next week for Shorts 102: The naked short.

          1. Anonymous Coward
            Anonymous Coward

            Re: Puzzled

            Congrats to my namesake Mr. Coward above for taking the time and patience to explain something when most of us would have (well, actually have) just downvoted the original comment and moved on.

            1. Local Group
              Paris Hilton

              Naked Shorts

              David Beckham's next underwear advert campaign:

              "The Emperor's New Briefs"


              'Look, Mum, 'e doesn't have any shorts on.'

              'That's David Beckham's willy, Nigel. Want to get some lovely bangers and mash?'

          2. This post has been deleted by its author

    3. Schultz

      Just who is buying these shares?

      Your pension fund.

      What could possibly go wrong? And it surely beats the alternative of investing in bitcoins.

    4. samlebon23

      Re: Puzzled

      Other than idiots who could you imagine buying Facebook shares.

    5. Richard Gadsden

      Re: Puzzled

      Tracker funds.

      Facebook is still big enough to be in lots of indexes, so all the tracker funds are buying.

    6. fandom

      Re: Puzzled

      "Just who is buying these shares now the price has plunged?"

      Everyone knows that the way of making money in the stock market is to buy low and sell high but everyone insists on doing it the other way around,

    7. This post has been deleted by its author

    8. PM.

      Re: Puzzled

      Microsoft .. ?

  3. Anonymous Coward
    Anonymous Coward

    And Tesco almost certainly hasn't paid for its stock until after it's sold it to you...

  4. Steve Button Silver badge


    I think it's a bit early to declare FB as foundering!?

    Let's wait and see, but I'd just like to go on the record as calling this one the other way. I still think there's a lot of value in that company and I can't see anything coming along to eat their breakfast just yet.

    Even though almost everyone hates FB after a while of using it, they all seem to stick with it (or leave and then come back).

    1. CarlC

      Re: Foundering?

      or leave and never go back..... as I have...... and a number of my friends and associates......

      Facebook is still a leader but I think more people are questioning the price they pay (privacy, advertising etc) for the service they get........

      1. Tom 35

        Re: Foundering?

        Or worse for Facebook. They use it to keep in touch with family, but turn off everything, disable apps/games and use an ad blocker.

      2. Fred Flintstone Gold badge

        Re: Foundering?

        more people are questioning the price they pay (privacy..

        Thank you for naming privacy a cost. Because it is, even though we have yet to *define* its value.

    2. Anonymous Coward
      Anonymous Coward

      Re: Foundering?

      There's a lot of value in that company... Hey, I smell some PR talk here!

    3. John 104

      Re: Foundering?

      That may be, but at the end of the day, FB still has no product. Or, at least no product worth paying for..

      1. Anonymous Coward
        Anonymous Coward

        Re: Foundering?

        Depends which side of the fence you are looking at. For users, FB has no product worth paying for; but to FB you are the product and the advertisers seem to think that's worth paying for.

        1. asdf

          Re: Foundering?

          >FB has no product worth paying for; but to FB you are the product and the advertisers seem to think that's worth paying for.

          Yeah and unlike Google they really don't give us much for not worrying about our privacy. Google at least gives us the best browser imho and a pretty decent open free (relatively of course) mobile os as well.

      2. GotThumbs

        Re: Foundering?

        Its users are its product, If you really didn't know.

        FB has THE largest pool of potential consumers in one place. Any company wanting to market to a select group can easily hit them through FB targeted ADs. This is how all online marketing is done but when you have customers that are constantly logged have a greater number of opportunities to market to them.

        Just many hours per day is the average FB user logged in? That's a marketing persons dream situation.

        Now, as more and more people get tired of the FB routine...then FB will continue to loose its edge/value to marketers AND investors.

        1. Anonymous Coward

          Re: Foundering? (users as product: GotThumbs)

          Actually, I think you'll find that the Indian or Chinese tax collectors have the largest pool of customers.

    4. Anonymous Coward
      Anonymous Coward

      Re: Foundering?

      "I think it's a bit early to declare FB as foundering!?"

      Probably but it's still a trivial calculation to show that the shares are worth about $10, so there's a long way to fall yet. At that point they'll simply have a realistic valuation. Whether they flounder or not is a separate issue.

      1. gujiguju

        Re: Foundering?

        Most of the IPO issues revolve about Wall Street corruption, I think..the rest is outside investors with imperfect knowledge trying to pretend that insider trading doesn't exist...

  5. LinkOfHyrule

    Best scam ever!

    Also, what's up with all the posts about Tesco in this thread? Are the forums on the wonk or something or are some of your readers often drunk during their lunch breaks? Seems like those posts were meant for another story not this one!

    1. Test Man

      Re: Best scam ever!

      What, the two posts about Tesco (apart from yours)? Clearly they're referring to the last sentence in the article.

    2. LinkOfHyrule

      My fail

      Missed the reference to Tesco in the article at the end. I thought for moment posts from another topic were appearing - shame as I was looking forward to resulting chaos that could have caused!

  6. S 11

    Stay away until $10

    If the US economy wasn't starting to show promise, and the holiday shopping season wasn't right around the corner, FB could fall another $7-$10. It's trading WAY above a comfortable P/E ratio based on speculation about mobile advertising.

    Zuckerberg is smart, but he's not that much smarter than the average very young person. He doesn't have the vision that an older CEO has. If I were a major investor, I'd TELL him to step aside and let the smarter people with more experience run the show.

    The product is eyeballs, and if users begin to see a better experience elsewhere, then what.

    The house-of-cards analogy fits like a glove. And if one thing is true, it's that internet companies come and go.

    1. Anonymous Coward
      Anonymous Coward

      Re: Stay away until $10

      And he would laugh in your face as you TELL him that, and remind you the ludicrous share-voting-rights arrangement he's set up means he still has absolute control, and you're a sucker for buying them.

    2. Anonymous Coward
      Anonymous Coward

      Re: Stay away until $10

      Ah, smarter older people like.. Rupert Murdoch? Hell of a success story in the social media bubble economy, that old campaigner.

    3. James 132

      Re: Stay away until $10

      I don't understand why an older, more experienced person would do a better job. It is highly likely they will be conservative, apathetic, and simply not driven enough. Facebook's success has happened because of Zuckerberg, not in spite of him.

      Overvalued as the stock may be, if Zuck were to go I would wager that Facebook would have very dim prospects indeed.

      1. Stuart 22

        The A to Z of Computing

        Yes, Zuckerberg was of a generation, understood that generation and used that generation to conquer the world (well almost). Trouble is young people grow up and go different ways, have babies or even become Zillybuck CEOs. They lose touch with each other. Sometimes they don't realise ...

        Facebook is heading for disaster. Apple went there and bounced back with avengence. Facing off disaster creates a hardness which continual success can whither. Somehow, somewhere long down the line I'm thinking one of these companies is going to buy the other ... but which?

    4. Anonymous Coward
      Anonymous Coward

      Re: eyeballs as a product

      See, that's why I don't like FB. I still need mine..

    5. Lucky2BHere

      Re: Stay away until $10

      I was solidly with you until your 3rd paragraph.

      The product is not eyeballs. Eyeballs - or traffice/pageviews/click-throughs, etc ,- is an indicator of activity and stickiness. The product is the platform; the environment in which FB members do their thing. To monetize that is the business model. To make money from the biz model is the intent.

      With you, again, on the house of cards, but not because it's an internet company. There are thousands of sites that have been around for a very long time. Because it's a relatively new medium - effectively less than 25 years - there are going to a lot of casualties. From 1896 to 1930, it is estimated there were about 1800 car *companies* in the U.S. alone (not car models!).

      Suckthebird is permanently immature and not fit for the job. He stumbled into this only because he wanted to get laid. He took ideas from other people as - without him doing much at all - the take-up rate skyrocketed. No magic, no flashes of brilliance, nothing outstanding. He did, indeed, take advantage of his luck, though. But, now, on to a real business. Something he has only just gotten a taste of, but has no real ability for.

      $10 is where I'm at, too. Even then, they better have a better way to stay afloat, and better ways to treat his membership, or his luck baby will disappear.

      1. Local Group

        Re: Stay away until $10

        Or, to quoth the Raven, "Forevermore."

        1. Anonymous Coward
          Anonymous Coward

          Re: Stay away until $10

          I would stay away until the whole lockout period has finished. This 271 million shares was just the first phase.

          October 15, 249 million shares will be available for sale,

          November 14, 1.32 billion shares can be put on the market.

          December 14 49 million

          May 13, 47 million

          April 1 2013, is probably a good day, to take the plunge.

  7. Rich 30

    real world assets?

    " worth roughly the same as UK retail monster Tesco, which has real-world assets such as shops, trucks and stock"

    Does facebook not own any buildings, or data farms or useful IPRs?

    1. Anonymous Coward
      Anonymous Coward

      Re: real world assets?

      It has some massive server farms, full of interestingly optimised machines.. I'm not sure what it owns and what is held under tax-efficient leases etc., though, mind.

      I'd be amazed if it didn't own a lot of patents now though, as it has been quietly hiring a lot of the best young computer scientists at rates higher than Google will pay, on the quiet. Some of this generation's finest minds are currently occupied trying to squeeze more out of the eyeballs of facebookers, depressingly enough..

      1. Anonymous Coward
        Anonymous Coward

        Re: real world assets?

        I doubt it's computer scientists. It will be psychologists, like the ones who Sainsbury employ to design their stores to keep you there as long as possible and make as many impulse purchases as possible next to the checkout. Computer scientists, as I periodically remind our MD, don't do UIs and features. We make it possible to do the maximum reliable computing with the least resources. Then "web programmers" come along and do things with the technology that make Baby Jesus cry.

        1. Anonymous Coward
          Anonymous Coward

          Re: real world assets?

          Doubt all you like, but they are snapping up some of the brightest and best computer scientists and to an extent mathematicians (for some reason the city seems to have less money to spare lately) from big tech universities, to build better scalable data mining to drive horrible sticky page clag advertising- of dubious value. A lot of very clever people are wasting their time on some horribly pointless stuff there :)

        2. asdf

          Re: real world assets?

          >I doubt it's computer scientists. Then "web programmers" come along and do things with the technology that make Baby Jesus cry.

          Nice another person who understand that using Dreamweaver and PHP scripts hijacked off the net does not make you a professional developer. Web graphical designer or Web hack are more appropriate. Well done.

          1. Random K
            Thumb Up

            Re: asdf

            Yes, web hacks indeed. I'd leave the graphic designers out of this though as they are facing a similar blight as of late. Funny thing is, the clients never seem to care about the efficiency of your code or true cross-browser compatibility (even if the former would save them a lot in operating costs and the later would cut down on support overhead). Those hacks charge a lot less to boot.

            I myself had to close up shop, and watch a lot of good friends get eaten alive in the job market. Ended up in SMB IT of all places. These days I count myself lucky to be out of that whole shit-storm. I wonder how long it will take till there is no one left who can actually write code and not just copy, paste, and replace a few numbers. Then again that is how it was in the beginning...

      2. Matthew Anderson

        Re: real world assets?

        Not very many home grown patents at all as they are just a young whipper snapper of a company. I do believe they purchased a bunch of AOL patents from Msoft recently though which seems to be the current trend with these companies.

  8. Anonymous Coward
    Anonymous Coward

    "average prices ranging between $19.27 and $20.69"

    How can you have more than one average price - where the shares sold in lots or something?

    1. Anonymous Coward
      Anonymous Coward

      Re: "average prices ranging between $19.27 and $20.69"

      Probably because the stock had sold in sufficient quantities at, and between, those prices to give you a good idea of its current, perceived, value.

    2. mr-tom

      Re: "average prices ranging between $19.27 and $20.69"

      Any given average would be of multiple stock sales across a trading day, so if sales took place on more than one trading day, there would be multiple averages.

      Plus, some big stocks can be traded in other national markets creating further duplication (although no idea whether FB is)

  9. Don Mitchell


    Facebook's product is an audience for advertising, which is also how Google makes a lot of its money. Is Google foundering? It is not at all obvious that something is fundmentally wrong, except that the stock market hasn't figured out what its share price should be.

    Privacy is an important concern, but at least FB gathers information voluntarily, from the user entering information and clicking "like" on various items. This as opposed to the giant surveillance machine that is Google, monitoring web searches, what videos you watch on youtube, scraping your email.

    FB faces two big technological problems. First is the technology of advertising, which is surprisingly complex. There is demographic analysis, even real-time actions for ad space when you visit some pages. The only alternative I see is an option to pay for an ad-free service. Experience with mobile apps suggests that only about 1 in 1000 users will chose to pay. However, you can easily make 1000x as much money by charging someone $10 a month -- the revenue from advertising is measured in fractional cents.

    The other technological problem for Facebook has been growth. People wonder why FB isn't adding fancy new features or doing all the things that G+ tried, but they are failing to comprehend the engineering challenge of scaling up data centers and software by orders of magnetude, to handing their ridiculous growth. Now that things seem to be settling down, I hope we will see FB turn their attention to making more improvements.

  10. Anonymous Coward
    Anonymous Coward

    Alternate take...

    There is something fishy about the whole downward spiral of the Facebook stock price. I think Facebook is deliberately bringing down its own share price for the following reasons:

    1. Facebook has already raised $16billion that it required. So they have on qualms (atleast not yet) on which way the share price goes.

    2. If Facebook shares skyrocket at this stage, then the employees who own shares will sell them and move on to form their own companies or ventures. Discouraging the current employees from selling shares by pushing down the stock price helps retain them.

    3. Pushing down the stock price will help Facebook save tax on their employee stock plan. Actually the more the price drops the less tax Facebook will have to pay tax to California state this financial year.

    4. Bloomberg LLC (the owners of Bloomberg TV) is an indirect investor in Facebook (via Greylock Partners). But if you watch Bloomberg TV's coverage of Facebook, it is so negative, repeatedly - as if like brainwashing, that you start feeling suspicious about the reporting!

    5. Read the following article, which covers other/more interesting facts about the news that this Reg article is reporting(which sadly is relying on sensationalism rather than covering more details!)

    Point to note in the above article:

    1. Peter Thiel sold his shares to Founder’s Fund Management LLC, Rivendell One LLC, and Lembas LLC. Note that Peter Thiel is a partner in Founder's Fund!

    2. Accel Partners "distributed" 57.8 million shares to its "limited partners"!

    3. Marc Andreesen, one of the members of Facebook’s board of directors, also submitted a regulatory filing, showing that he received more than 6.5 million shares distributed by Greylock Partners!

    So essentially they are rotating the shares amongst themselves!

    The share value is probably artificially pulled down for tax purposes, payment to acquired companies (such as Instagram etc) and to retain employees for some more time.

    Just a thought.

  11. ZenCoder

    The health of the stock is not the same as the health of the company.

    Lets say there is a company that's making a tidy profit quarter after quarter, they have a good produce people like using, it provides good jobs for its employee's sends lots of taxes to federal and local governments alike.

    Then some wall street speculators decide to buy the company for an amount that is 10 times what its profits could justify, not really caring about the numbers ... just hoping to ride a bubble and get out before it pops.

    Lets say that company does an incredible job and doubles or even triples its profits.

    That company is now officially failing. Its profits are still only a fraction of what the gamblers on wall street would be happy with.

    Its stock prices will continue to fall, at some point maybe even falling below the actual value of the company. Then some venture capitalist swoops in and tears the company apart for a quick profit. The assets go in one direction while somehow, magically all the debt goes in another.

    Meanwhile this perfectly healthy company which was more the adequately providing goods & services, jobs and tax revenue the entire time ceases to exist.

    Its creditors are in bankruptcy court argues over pennies on the dollar.

    Its employee's are mostly on unemployment.

    Its stock holders are now gambling their money elsewhere.

    Its top executives rode their golden parachutes to safety.

  12. chiller

    Tesco and Facebook roughly the same value? What a joke.

  13. Alan Brown Silver badge

    Shares and valuations

    As many people have discovered, you can be a zillionaire on paper, based on the shares you own.

    Shares only have value when realised. This week's high flying ones might be worth less than the paper they're printed on tomorrow.

    So yes, he's made a killing on his investment - and the sale value is probably still slightly higher than its actual worth. If nothing else, Facebook's IPO should be remembered as one of the greatest Pump-and-dumps of all time.

  14. Anonymous Coward
    Anonymous Coward

    As I said when they IPO, we'll see a load of investors dumping stocks as soon as the lock-out period expires. It'll be the employees next. Price might stabilise after that. Probably around $18.

    I might grab a small chunk then, if only so I can end Facebook arguments with, "It's my company so I'm right, bitch".

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