Zuckerberg Sold 1.14 Million Shares Ahead of Facebook Data Breach

Facebook CEO Mark Zuckerberg.

(Photo Courtesy: Facebook/Mark Zuckerberg)

As social media giant Facebook faces trouble over the misuse of the data of 50 million users, reports emerged that CEO Mark Zuckerberg had sold 1.14 million of his shares in regularly scheduled programs before the scandal.

CNBC reported that Zuckerberg, along with another Facebook executive, sold their shares at $20 more than the trading value in the two weeks before Facebook’s ongoing problem.

Although no one has suggested any suspicious activity behind the sale, the sheer value of the number of shares – being the highest insider sale for any public company in the past three months – can lead to a fall in the company’s value at such a crucial time.

Facebook’s shares dropped 6.77 percent into correction territory on Monday, the first day of trading since Facebook’s data scandal. Facebook’s shares traded near $163 Tuesday afternoon, a 5.3 percent low.

"The insiders use Rule 10b5-1 to sell on a regular basis. There are trading plans that they adopt and then they sell shares in a methodological manner," CNBC quoted Ben Silverman, director of research at InsiderScore as saying.

I don’t see a connection between the insider selling and the news that has come out in the last few days.

Ben Silverman, Director of Research, InsiderScore to CNBC

Zuckerberg's sale accounted for the most number of shares sold so far. He had announced in September that he plans to sell 35 million to 75 million shares over the next 18 months in order to fund the Chan Zuckerberg Initiative, a philanthropic initiative where him and his wife have planned to give away 99 percent of their company stake to help with disease and education.

Zuckerberg sold 2,28,400 shares a day on 8 March and 9 March each, 2,20,000 shares each on 12 and 13 March and sold 2,45,400 shares on 14 March, CNBC quoted Vickers data as showing.

The total number of shares sold was just over 1.14 million which were sold at an average price of $183.81 that made for a payout of about $210 million.

Zuckerberg still holds 393.1 million shares in Facebook, according to S&P Global Marketing Intelligence.

CNBC further reported that Facebook’s Chief Technical Officer Michael Todd Schroepfer sold 38,024 of his shares on 13 March, at the average price of $183.20 – the total buyout for the same being about $6.97 million, again citing Vickers data.

Facebook has been in trouble since the data breach of 50 million Facebook users surfaced. Cambridge Analytica, a political consultancy that worked on President Donald Trump’s campaign, gained inappropriate access to data on 50 million Facebook users.

(With inputs from CNBC and Reuters)