Facebook listed on the Stock Exchange on 17 May 2012 at $38 per share. I wrote before the listing how little faith I had in this company, because it really does not have a commercially viable model – or it does, but not at the valuations it was given. It is interesting to see now that the 90 day period which many of the original investors were tied into is up and how many of them are selling their shares. It is particularly interesting, bearing in mind of course that Facebook’s share price is down, and of course it varies all the time, by approximately 50%. In other words, if the original investors believed the share was worth more than its current price, they would do what all the long-term investors do and that is to sit back patiently and wait for the true value of this company to be recognised, if indeed it has a better value, and sell their shares at that time.

Instead, and these are people who don’t need the money, they have obviously decided that Facebook at the half the price they were trying to sell it to the public is in fact a good deal and are quite happy to sell the same shares that the public was asked to buy at $38 per share at the current price of $19. Facebook’s first major investor, Peter Thiel, has already sold 20 million shares worth over $400 million at the current price. Of course, he is not actually losing because he only invested $500 000 in Facebook in 2004 and he has already sold his shares on to the public for a total of $1000 million in the meantime (he sold $640 million worth of shares on the first day of trading).

Mark Zuckerberg can only begin to sell his shares in November and of course that is one thing to be worth billions in shares, but reality is another thing altogether. If he were to try and sell his shares, there will not be enough buyers for them and the market would drop out the bottom and so to actually get some of the money in cash, he is going to be forced to sell little bit by little bit. It is a wonderful game for the wealthy to make money and it really does not actually create wealth – you just make a big fuss about your amazing product, how it is going to make huge money one day and then you get people to buy shares, which you have given yourself for free or to your friends at a very low price, and in Peter Thiel’s case, a 2 000 times lower price than the public is paying now. It is not wonder that so many people are terribly disillusioned with Facebook, but in all honesty they really should have looked at the business model and the ridiculous valuations that Facebook and its corporate sponsors were talking about.