Facebook's 1st Big Investor Dumps His Stock

Peter Thiel's move could be bad news

By Evann Gastaldo,  Newser Staff

Posted Aug 21, 2012 7:00 AM CDT

(Newser) – PayPal founder Peter Thiel, Facebook's first major investor and also a board member, has sold off the majority of his shares. Thiel invested $500,000 in Facebook in 2004, and has made more than $1 billion from that investment, the Wall Street Journal notes. He had already sold some shares before the IPO and some during the IPO; most recently, he sold 20.1 million shares and distributed another 2.2 million, making around $395.8 million—quite a bit less than the $762 million he would have made had he sold the shares during May's IPO, when stock was priced at $38 per share. Thiel pre-arranged the deal when the stock was still at that level, TechCrunch notes. He still has 5.6 million shares.

The Journal is quick to note that Thiel made a bundle off his original investment, and that early investors often sell off their stakes after a company goes public. Even so, the timing is bad for Facebook, considering how poorly its stock is doing. "Imagine being a Facebook employee right now and seeing Thiel sell the majority of his stock at what many are hoping is its low point," writes Billy Gallagher on TechCrunch. Indeed, shares hit a record low yesterday—less than half the IPO price at $18.75—before closing at $20.01, the San Jose Mercury News reports. All of this is also bad news for Instagram, which Facebook purchased for a deal valued at $1 billion—at the time. Since Facebook paid quite a bit of that in shares, that deal has now lost Instagram nearly $300 million, the New York Times notes.

In this Oct. 20, 2000 file photo, PayPal Chief Executive Officer Peter Thiel, left, and founder Elon Musk, right, pose with the PayPal logo at corporate headquarters in Palo Alto, Calif.
In this Oct. 20, 2000 file photo, PayPal Chief Executive Officer Peter Thiel, left, and founder Elon Musk, right, pose with the PayPal logo at corporate headquarters in Palo Alto, Calif.   (AP Photo/Paul Sakuma, File)
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