Facebook is conducting a secondary offering, selling an additional 70 million shares — 41.4 million of which are going to be sold by founder and CEO Mark Zuckerberg.
Facebook is trading at around $55.75 (though the stock has fallen about 2 percent in trading since the announcement today), meaning Facebook is raising around $3.9 billion in the offering. The company says Zuckerberg's stock sale will largely be used to pay for taxes on stock options he is exercising, though it seems he will pocket a small amount of the proceeds.
It follows a huge run up in the company's stock price, which has doubled in the past year — a majority of those gains coming from a huge run beginning in August. Facebook is about to join the S&P 500 as a result of its strong performance, and is now worth about $134 billion.
Facebook is issuing about 27 million new shares, a $1.5 billion windfall that the company says it does not have a specific use for, but says it could be directed toward "acquisitions of complementary businesses, technologies, or other assets." Last month, it was revealed that Snapchat, an self-destructing photo-sharing app, declined a $3 billion cash offer from Facebook to purchase the company. Facebook currently has about $9.3 billion on its balance sheet.
Marc Andreessen, one of Facebook's early investors, is also selling a small stake of his 1.6 million shares, worth about $90 million. When Facebook initially went public, few of the company's investors heavily cashed out. Early investor and board member Peter Thiel would later sell off shares following the company's IPO.
The company also says that Mark Zuckerberg is giving 18 million of his shares — about $1 billion — to charity as part of the offering.
Matthew Lynley is a business reporter for BuzzFeed News in San Francisco. Lynley reports on Silicon Valley and the tech industry.
Contact Matthew Lynley at firstname.lastname@example.org.
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