Facebook's Zuckerberg selling $2.3 billion in stock

Scott Martin, USA TODAY5:21 p.m. EST December 19, 2013

(Photo: Paul Sakuma AP)

SAN FRANCISCO -- With his stock ringing up all-time highs, Facebook CEO Mark Zuckerberg is cashing out $2.3 billion worth of holdings and jingling his sleigh bells.

Zuckerberg's stock sale, in part to pay taxes, comes as the CEO is handing a $1 billion donation worth of shares to the Silicon Valley Community Foundation. The gift will boost his philanthropic efforts in education, including to local school districts, an interest shared by his wife, who went into teaching after Harvard, and one that has landed him teaching in a nearby school.

The personal stock sale is timed to the company offering shares worth $1.5 billion along with investor and board member Marc Andreessen cashing out about $91.4 million, according to documents filed with the Securities and Exchange Commission.

Based on Wednesday's closing price of $55.57, the 70 million total shares offered would be worth about $3.9 billion.

Wall Street tends to get nervous over such sizable insider stock sales with concerns of the increased share dilution in the market and fears an insider's sale is an indicator of the company's direction. Shares of Facebook on Thursday fell 1% to $55.05 in trading on the news.

Zuckerberg's stock sale to help pay taxes, connected to an option to purchase shares, could provide reason to allay concerns.

"It is common for insiders who have almost all of their eggs in one basket to sell some shares in order to diversify their personal wealth and, in Mark Zuckerberg's case, to pay taxes, which is why investors do not get even more concerned," says University of Florida professor Jay Ritter.

Facebook shares may also enjoy some insulation from market whiplash as the company is set to see a catalyst to the stock for its upcoming inclusion on the S&P 500.

"The Facebook share sale thus comes at a good time -- just when the demand for shares of Facebook from index funds is increasing," says Ritter.

The social-networking giant said it plans to use the proceeds of the sale for working capital and general corporate purposes. Facebook said it may use a portion of the proceeds for "acquisitions of complementary businesses, technologies, or other assets," according to the regulatory filing.

Facebook's follow-on stock sale is the first since the company went public in May 2012, a move that comes as shares have rebounded more than twofold in the past year.

The stock sale at Facebook arrives just a day before the company joins the S&P 500 Index.

Zuckerberg will use the sale to pay off taxes related to exercising an option to purchase 60 million shares.