Does Zuckerberg’s American Tour Endanger the FB Stock Price?
Facebook Inc (NASDAQ:FB) CEO Mark Zuckerberg has been touring America’s 50 states. He is trying to understand how ordinary Americans live and work.
Or so he says.
His critics believe he has another mission: The White House. Zuckerberg’s detractors argue that he is trying to shore up support for a presidential run in 2020. Since there are a lack of viable Democrats to oppose President Donald Trump, his running is not as far-fetched as it would have been four years ago.
Should investors be concerned? If Mark Zuckerberg launches a political campaign, he will be taken away from his day job, which is to run Facebook, one of the biggest companies on the planet.
Some analysts worry that Zuckerberg’s absence could jeopardize the firm’s success.
Why? Because he is the only leader Facebook has ever known. Everything Facebook does and wants to do is shaped by his vision.
We have absolutely no idea what a Zuckerberg-less Facebook even looks like. Who would be in charge? Sheryl Sandberg? I think she’s a terrific manager, but I don’t know if she has the visionary schtick down pat.
The bottom line is this: if Zuckerberg leaves, FB stock will drop like a rock.
Facebook Stock Needs Zuckerberg
There are two reasons why the Facebook stock price depends on Zuckerberg.
1. He is a tech visionary.
I know that sounds grandiose, but it happens to be true. Let’s not forget that Zuckerberg started Facebook in his college dorm room. Since then, he’s shown serious chops as CEO. He made the brave decision in buying Instagram and WhatsApp, and everyone thought he was overpaying. History has proven him right.
2. He controls a majority of voting rights.
This isn’t going to change any time soon. Facebook is issuing new shares in a 3-for-1 stock split, but the new shares won’t have voting rights. In other words, the new shares will dilute the voting power of regular shareholders. Facebook structured the split this way so Zuckerberg can sell some of his shares while retaining majority voting rights. It keeps him in control.
It’s impossible to deny that FB stock has done incredibly well with Zuckerberg at the helm.
A new CEO would not only have to fill his shoes, but would also have to deal with him as the majority shareholder. That’s like a coach leaving to become the team owner. It causes too much confusion.
Worse still, Zuckerberg could return to his job at any time.
Hidden in the corporate governance of Facebook is a small note. It says that Mark Zuckerberg can leave Facebook and return at ANY time…if he leaves for a government job.
That is not a normal exception in employment contracts.
Naturally, it adds to the speculation that he’s going to run for president. But I think it’s too soon to panic. Zuckerberg may be doing nothing more than a public relations tour.
We all know that Facebook’s image was muddied by the “fake news” drama surrounding last year’s election. So maybe Zuckerberg is trying to smooth ruffled feathers by getting to know “real Americans.”
Or (admittedly less likely), Zuckerberg could be doing the right thing. Maybe he realizes that a 32-year old billionaire is completely out of touch. Maybe this is his attempt at first-person market research. Who knows.
All I can say for sure is that the FB stock price is intertwined with Mark Zuckerberg.