Facebook's 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 percent 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 disdainful message is 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.
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