Marc Andreessen Is Dumping Facebook Stock; Should Investors Bail, Too?

 Time to Dump FacebookDon’t Worry, FB Stock Is Safe

Facebook, Inc. (NASDAQ:FB) has taken some very nasty blows recently, mostly because of insider sales. Two big owners of FB stock, Jan Koum and Marc Andreessen, recently cashed out. Rest assured, those sales of Facebook stock don’t make a trend.

A lot of people would respond with the “where there’s smoke, there’s fire” argument, but that means they aren’t that familiar with who sold their FB shares.

The two people who sold off massive portions of Facebook stock fit into a very specific category. Jan Koum is the CEO of WhatsApp, a messaging service that Facebook bought for $19.0 billion last year. He recently sold $274 million of FB stock. A week earlier, the famous venture capitalist Marc Andreessen dumped 73% of his stake in Facebook, amounting to $160 million. (Source: “WhatsApp’s Jan Koum Sold $274 Million in Facebook Stock Last Week,” Re/Code, November 30, 2015.)

I can see why that would make people nervous. Both of these guys are brilliant and insightful, so it’s easy to jump to, “Do they know something I don’t?” Of course, it is possible both Andreessen and Koum think FB stock has hit its peak. Anything is possible. But it just seems improbable.


Here’s why…

Andreessen and Koum Love Facebook Stock

For starters, 2015 has been a very successful year for Facebook. The stock is up nearly 40% on a string of successes and it shows no signs of stopping. Even more damning is the fact that both Andreessen and Koum sit on the company’s board of directors. Two members of Facebook’s board wouldn’t keep their seats if the company were due for a fall. They have reputations to protect, especially Marc Andreessen; a venture capitalist can’t be seen too close to an implosion of that magnitude.

So why did they choose to cash out? From my vantage point, it all comes down to the culture of Silicon Valley. Jan Koum founded WhatsApp because he likes to nurture an idea into a full-fledged company. That is what drives him. Is it any surprise, then, that a guy like that would want to free up capital to launch another project?

Think of Elon Musk and his past. After selling Zip2, a company he founded with his brother Kimball, Musk poured his cash into PayPal Holdings, Inc. Once PayPal sold, he used those profits to launch SpaceX and Tesla Motors, Inc.

Jan Koum strikes me as someone with that same restlessness in his DNA.

Of course, Marc Andreessen is, by nature, a transient investor, because he needs the capital to help build up younger companies.

Looking Ahead for FB Stock

Marc Andreessen is one of the founders of Andreessen Horowitz, a venture capital firm that’s only a few years old. However, he helped build the company into the best Silicon Valley has to offer by being relentless in his pursuit of new investments. (Source: “Tomorrow’s Advance Man,” The New Yorker, May 18, 2015.)

So there’s no need for FB stockholders to panic—both Koum and Andreessen are just looking for something new.

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