Mark Zuckerberg can count trading as one of his many skills. He sold a good chunk of stock on December 20th at $55.05. FB stock had rallied 20% in the prior 4 weeks, and FB management took the opportunity to unload almost $4 billion worth of stock near the stock’s all-time highs.
In Facebook’s history, let’s look at the 2 major stock sales on the part of FB management:
The first sale was the IPO at $38 in May 2012. After that sale, the stock did not see that level again until August 2013. FB management timed the IPO quite well in terms of selling high (not so well in terms of public relations).
This time around, the sale price was $55.05, amidst enthusiasm for Facebook given the addition to the S&P 500 as well as 2013 drawing to a close. What happens from here is still up in the air, but the short-term price action offers a potential reason for caution.
Facebook cleanly broke out above the $55 resistance level on December 23rd. Since that gap-and-go move higher, however, FB shares have been under pressure. Today’s failure to hold the $55 support level makes the breakout look more like a failed breakout:
If FB remains below that important $55 level for the balance of the week, the odds favor a deeper pullback to start 2014. A move back down to the $45 level would be the spot to play for a long position in the short run. If FB can get back above $55 soon, then the stock’s prospects look more favorable. But if Zuck’s share sale is as timely as the IPO, then FB might have a tough slog ahead of it in the new year.