Facebook's (FB) nightmare on the stock market just keeps getting worse. The social network's share price has been cut nearly in half since it debuted at $38 in May, as investors worry that the company doesn't have a sustainable model to make money.

And this week, it was revealed that Peter Thiel, one of Facebook's earliest investors, was one of several company insiders who dumped stock as soon as they were allowed to when a "lockup" period expired last week. Thiel, who remains a member of Facebook's board, has cashed in 90% of his stock since the IPO, renewing criticism that insiders were profiting at the expense of the company and its newer investors.

"Call me naive," said CNBC analyst Jim Cramer in a lengthy diatribe, "but I had hoped the insiders would actually be buying stock as a way to show faith in the underlying company and its longer term growth." 

Is Thiel's move a snub to investors?

Thiel's message loud and clear

Thiel's move exposes the "folly of investing in Facebook," says Jeffrey Goldfarb at Reuters. Dumping his stock "cements the idea that Facebook's IPO was run by and for its early backers" instead of future investors. Thiel's remaining on the board "only rubs their noses in it," since newer shareholders would obviously prefer a representative who actually believes the company can succeed.

He should step down

As a board member, Thiel "should be embarrassed," says Erick Jackson at Forbes. Investors are bound to suspect that "the insider knows something" ominous about the company, especially "if he's willing to dump at half the IPO price."

Thiel certainly has a right to reap his reward for investing early in the company -- "just leave the board first and ensure you have a replacement who wants to buy some Facebook stock at $19."

More investor than board member

Thiel's "share sale is best explained as the reasonable actions" of a venture capitalist rather than a Facebook board member in it for the long haul, says Tom Foremski at ZDNet. Indeed, the sale "is very likely a signal that Facebook is looking for a new set of board members."

Thiel "was useful when the company was small and growing fast," but now Facebook needs a different kind of expertise to "help it through that tricky post-IPO phase and into a more mature and stable configuration." Thiel is likely on his way out.

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