Peter Thiel Sells Majority Of His Facebook Shares In Deal Planned Pre-IPO

Would you expect him to do anything else? Invert the question: if you had $500 million cash, would you spend it all on Facebook stock? Or Google stock? Or any one stock?<p>Even for company insiders who really believe in the future of their company, it isn't prudent to hold more than a small fraction of a billion-dollar fortune in one stock, from a purely rational perspective. Of course, the public expects irrationally enthusiastic behavior from founders, which is the only thing that leads to the gigantic fortunes amassed by the Gates/Ellisons of the world.

Everyone keeps focusing on Facebook as an ad platform, and pointing to the difficulty in monetizing mobile via ads. But I'm betting Facebook is on the brink of rolling out a digital wallet. They already act as an authentication/identity service with hundreds of millions of users. If those users linked their FB accounts to their bank accounts, they'd be able to buy anything on any integrated website that they log into with FB Connect -- or eventually in any store that wants to handle FB payments. With FB taking a small cut of every transaction, I imagine PayPal and Stripe would be in trouble, no? Mobile doesn't have to be about ads....

It is worth highlighting that this sale was via a Rule 10b5-1 trading plan. That is, Thiel made the decision to sell prior to the IPO.

I think this is just thiel putting his money where his mouth is. Anybody who has followed him knows it's no secret that he's spoken out against companies solving small problems and has even implied facebook to be squarely in that camp.

I'm going to buy when it gets closer to $10 per share. Half the world uses Facebook every day so let's not pretend it isn't an awesome business with utterly massive potential.

Facebook have a problem that Google hasn't.<p>1. Their social graph is great but it has one major flaw. It's very bad at profiling intent.<p>They also have a problem they share with Google.<p>2. They haven't found a way to make advertising work on mobile, an increasing part of their visits.<p>Unless they find a way to solve those two areas they will not be able grow their revenue without hurting their visitors.

The 10b5-1 is actually bit fuzzy on whether you can cancel trading plan. SEC basically says that if you cancel the trade than you are not legally liable because no transaction actually occurred and so one cannot claim that you profited from insider trading. So in theory you can cancel the trading plan if you like. However if SEC <i>feels</i> that you cancelled only because of price drop then they can come after you for ALL your future trading plans or may even re-examine previous trades to see if you were trying to game the system. Therefore executives are advised by to cancel only under extraordinary circumstances.<p>So I think Thiel had lot of legal pressure, although technically not an obligation, to sell as per his trading plan filing. He could have taken risk but it's probably not worth it for another half-a-billion of profit if you are already multi-billionaire and if you are already cultivating 1000X returns as it is.<p>On the other hand it is surprising that he decided to sell <i>most</i> of his stock instead say only quarter or so. I would think Thiel as a long term investor in FB from what I've read in the book "Facebook Effect". Thiel is one of the few person that probably knows most upcoming plans and products in works and problems at FB. A typical strategy for investors like Thiel is to cash out in stages instead of dumping most stock at once like regular VCs do (10-25% each quarter, for example). Considering his level of insider knowledge this only means he did not expect FB stock going up at the time of trade filing in at least 1 to 2 year horizon.<p>This is even more surprising because I keep thinking FB is going to come out with something like AdSense any day now and almost instantly double its revenues bringing stock back to $25-30. Obviously Thiel has calculated things differently.

The Facebook story is over. They got ahead in the social network game of making communication over the Internet easier. They did this by making Email obsolete. One centralized system where all users can send instant messages to one another without remembering user logins, email addresses, or phone numbers. This is the ONLY advantage Facebook has over its competitors. And I guarantee their current advantages are going to be eroded away by more open protocols. In the same way that Twitter's current advantage in microblogging is also going to be eroded away.<p>If you get too far ahead of everyone else you become the target, and there are simply so many startups and smart brains working against Facebook and Twitter at this point that they simply will not be able to maintain their leads indefinitely (which is what their market values are incorrectly predicting).

Selling before the end of the year saves him over a hundred million in capital gains, too.

Peter, if you are reading this, there's one question I'd love to ask. Why did tou even buy Facebook shares in the first place? Just to say you owned a part of Facebook? It was a clear failure from the beginning when they hit the market, way overpriced - surely you must of known this too. And then comes why other question. Why sell now, after loosing so much money? If you were willing to take a gamble in the first place, you should of been prepared to stick with it for a few years - it might go back up, but that's only if FB manage to get their shit together.

The market is concluding FB is not likely $1 trillion company. The Q is order of magnitude for FB $TEV.<p>A. $1000B ? No... B. $100B? Maybe C. $10B? Possible<p>I think Theil is obvi not betting on $1T.<p>Thus, after 8 yrs, time to go.<p>At ranges between B and C, holding a large position in a public stock that is exhibiting true volatility (ie, something other than upward drift), is not likely to please his LP investors.<p>Nor, similarly would it be advised for his own holdings.<p>Reading more into the tea-leaves (ie, operationally) might be fun, but I'm not sure its adding explanatory power to what we are seeing here.