DISQUS

leonardspeiser · 5 months ago

Hi Eric, if any of the employees have had to buy their stock (e.g. left already) or received shares vs. options, wouldn't the government tax them on those at FB's current size? If so, I wonder if some really need to sell to cover that tax bill. Thoughts?

L

Eric Eldon · 5 months ago

That is an interesting point. I'll see if I can find out any more.

Mojoke · 5 months ago

If I were a vested employee, Id sell 50% but then again..$100M doesnt go far at all across 1000 emps so Id like to see how much everyone REALLY can sell...what up to 1% of their holdings??? Whats the real skinny?

Eric Eldon · 5 months ago

True. A lot of employees don't own stock, or at least not much -- or that's my impression.

Jeff Pester · 5 months ago

I'm a big fan of scaling in to and out of your holdings. With that in mind I'd recommend they just sell the percentage of their company stock that fits their risk profile and they'll be happy. For some employees it'll be 5%, for others 50% or more.

You can never go wrong by taking at least a little money off the table when you get a chance.

Eric Eldon · 5 months ago

That's certainly sound advice. I'm just saying that the opportunity cost of selling any stock now is looking higher and higher.

Jeff Pester · 5 months ago

Paraphrasing Warren Buffet from his mentor Benjamin Graham, “In the short-run, the market is a voting machine – reflecting a voter-registration test that requires only money, not intelligence or emotional stability – but in the long-run, the market is a weighing machine.”

When I began my career as a stock-index futures trader at the CME in Chicago one of my mentors gave me a piece of advice that has served me well over the years: "Sell some when you can, not when you have to. You never know what tomorrow will bring."

Both messages essentially tell you to lighten your position when market gives you the opportunity. Facebook employees have what might be a limited opportunity given the restrictions of this program and the uncertainty of any additional future exit chances.

Just sayin'

Jeremy Wright · 5 months ago

Yep, anyone who's had the opp to sell startup shares and not done it would tend to agree. Get some cash off the table while you can. If you get a second offer at a higher price a year later, take more off. Then when it IPOs try and sell some at the bounce, and some later.

It's just resource management. Or, y'know, do a net present value calc and it should always show that selling now at any non punitive price is better than maybe selling later. So sell some now at your NPVFE-bump price and be happy.

Eric Eldon · 5 months ago

You guys are guilt-tripping me into changing the headline to something like:

"Facebook employees: Don't sell any shares (unless your investment advisor says otherwise)"

Jeremy Wright · 5 months ago

Facebook stock is kinda like Google stock pre/post-IPO. Googlers shoulda sold some in the IPO bump, then regularly evaluated every quarter for continued growth. If it kept going up, they should kept selling. Then every year they should have asked for more options to compensate (partially) for the shares they were selling.

FB employees should just keep riding the wave.

The only time they *maybe* shouldn't sell is on down valuations. But this is an up valuation for most since nobody ever *sold* at the 15BB valuation.

James W. Ash · 5 months ago

it's a down valuation from the 15bil though. you are contradicting yourself, no?

Jeremy Wright · 5 months ago

No, since none of the employees saw that valuation. It was purely for investor class stock.

Put it this way, as a smart man once told me: you NEVER regret trading paper money for real money. You ALWAYS regret NOT trading it in time.

Mark Holman · 5 months ago

If you've ever been in a start-up and had a chance to take some money off the table at a $6B valuation you would do it in a heartbeat. For every Google story there are a hundred others that the valuation evaporated because of the market, whims of users, kids running the company, etc. I worked with some guys that had a term sheet to buy their company at $400 m and they turned it down. Sold the company 3 years later for $5m. I wouldn't sell it all, but I would sell as much as I could to have peace of mind in the "unlikely event of the loss of cabin pressure".

spryka · 5 months ago

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James
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