Facebook is attempting to heal its stock wounds by refusing to sell any stock to pay its huge tax bill and allowing employees to cash in ahead of schedule.
The social giant has a $2 billion tax bill to cover due to restricted stock units for employees, but instead of selling stock to pay it off, Facebook will use cash and its credit facilities. Facebook CEO Mark Zuckerberg will not sell any shares for at least one year, while directors Donald Graham and Marc Andreessen will sell for tax-related purposes -- but neither will sell any shares personally held by them.
Facebook will also let employees sell their shares weeks ahead of the original November 14 date, which is part of a market stand-off provision. Instead, employees can sell October 29 -- not long after the third-quarter financial results are released on October 23. According to the company's regulatory filing, about 234 million shares once held by employees will be up for sale on October 29.
These moves aim to calm an increasingly frustrating stock situation for Facebook. The social network has lost more than half of its market value since its May 2012 IPO, leading to
troubles regarding the company's original value at over $100 billion and an initial stock price of $38 USD per share. Understandably, Facebook is looking to relieve a little pressure from investors and distraught employees.
However, doing this will result in a 101 million reduction in total shares outstanding. Also, Facebook shares achieved a new low of $17.55 on Tuesday, but rebounded Wednesday to close at $18.58.
