Facebook to face disgruntled investors

The social network giant prepares for its first ever shareholder meeting.

By Benzinga Jun 11, 2013 11:11AM

Facebook logo (© Daniel Acker/Bloomberg via Getty Images)By Tim Parker


Facebook (FB) was the beneficiary of really good timing on Monday ahead of its first-ever shareholder meeting on Tuesday.


On Monday, rumors circulated that the social network would be added to the S&P 500 ($INX) sooner rather than later. Paul Larson, chief equities strategist at Morningstar, said that the company's inclusion could be, "imminent -- within a couple of weeks."


This sent the stock soaring ... and then came the upgrades. Topeka Capital analyst Victor Anthony referred to a recent Facebook presentation that touted its ability to target various segments of Facebook in order to allow advertisers to reach the right people at the right time.


Stifel reiterated that Facebook would likely be included in the S&P and upgraded the stock from "hold" to "buy," saying in the note that "Every so often in Internet investing, a stock's recent underperformance causes investors to make up reasons why a company will miss its financial estimates. We believe that is the case with Facebook today, and would add to shares at current levels."


The news' timing was perfect, just ahead of Tuesday's shareholder meeting -- Facebook's first ever. And what better way to calm some unhappy shareholders than to log a 4.5% move to the upside the day before?


Without question, shareholders are going to want to know why Facebook went public if its intention was to save up the billions of dollars it raised in cash rather than invest them. Second, investors will want to to know why so many key company officials are selling their stock. In other words, why is it that the stock is down substantially from its IPO price.


MarketWatch makes the case that shares aren't rising despite the company's 30% to 40% growth rate largely because of the constant stream of insider selling. In the last two months, Chief Financial Officer David A. Ebersman, Chief Operating Officer Sheryl Sandberg, Chief Technology Officer Michael T. Schroepfer and Vice-President and General Counsel Theodore Ullyot all sold stock.


Mark Zuckerberg owns 60 million shares but has vowed not to sell any until, at least, September.


Shareholders want to know why they should have confidence in the stock if the insiders holding it do not.


Second, why is the company holding on to more than $11 billion in cash and what are its plans for deploying at least some of it? Especially so soon after its IPO, investors want to see their money invested to grow the company -- at least to the point where the stock isn't down 40% off of its IPO price.


If that isn't enough, the LA Times reports that environmental activists are expected to be there to protest Zuckerberg's foundation's support of lawmakers who support the Keystone XL pipeline.


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Jun 11, 2013 7:50PM
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Facebook logo (© Daniel Acker/Bloomberg via Getty Images)By Tim Parker


Facebook (FB) was the beneficiary of really good timing on Monday ahead of its first-ever shareholder meeting on Tuesday.


On Monday, rumors circulated that the social network would be added to the S&P 500 ($INX) sooner rather than later. Paul Larson, chief equities strategist at Morningstar, said that the company's inclusion could be, "imminent -- within a couple of weeks."


This sent the stock soaring ... and then came the upgrades. Topeka Capital analyst Victor Anthony referred to a recent Facebook presentation that touted its ability to target various segments of Facebook in order to allow advertisers to reach the right people at the right time.


Stifel reiterated that Facebook would likely be included in the S&P and upgraded the stock from "hold" to "buy," saying in the note that "Every so often in Internet investing, a stock's recent underperformance causes investors to make up reasons why a company will miss its financial estimates. We believe that is the case with Facebook today, and would add to shares at current levels."


The news' timing was perfect, just ahead of Tuesday's shareholder meeting -- Facebook's first ever. And what better way to calm some unhappy shareholders than to log a 4.5% move to the upside the day before?


Without question, shareholders are going to want to know why Facebook went public if its intention was to save up the billions of dollars it raised in cash rather than invest them. Second, investors will want to to know why so many key company officials are selling their stock. In other words, why is it that the stock is down substantially from its IPO price.


MarketWatch makes the case that shares aren't rising despite the company's 30% to 40% growth rate largely because of the constant stream of insider selling. In the last two months, Chief Financial Officer David A. Ebersman, Chief Operating Officer Sheryl Sandberg, Chief Technology Officer Michael T. Schroepfer and Vice-President and General Counsel Theodore Ullyot all sold stock.


Mark Zuckerberg owns 60 million shares but has vowed not to sell any until, at least, September.


Shareholders want to know why they should have confidence in the stock if the insiders holding it do not.


Second, why is the company holding on to more than $11 billion in cash and what are its plans for deploying at least some of it? Especially so soon after its IPO, investors want to see their money invested to grow the company -- at least to the point where the stock isn't down 40% off of its IPO price.


If that isn't enough, the LA Times reports that environmental activists are expected to be there to protest Zuckerberg's foundation's support of lawmakers who support the Keystone XL pipeline.


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