Peter Thiel, one of the earliest Facebook investors, has sold the majority of his shares in the social networking giant.
The information comes by way of a filing made to the U.S. Securities and Exchange Commission. The filing reveals that the billionaire sold 20.6 million Class A Facebook shares on Thursday and Friday.
According to the filing, Thiel managed to offload his shares at an average price of $19.73 which has resulted in nearly $400 million gain for him.
The PayPal cofounder was one of the first investors to infuse money to Facebook. He invested $500,000 in the social network back in 2004 which earned him a 10 percent stake in the company.
However, after the share pool of the company has been diluted and private share sales have been done, he held a 3 percent share of the company.
According to the filing, most of the share sale was for the Founders Fund in which Thiel sits as a partner.
The filing also indicates Thiel holding companies Lembas LLC and Rivendell LLC as well as the Lord of the Rings references as other participants in the share sale.
Thiel’s selling of his stake in Facebook comes just after the lock-out period for inside investors in Facebook. During the period, inside investors were not allowed to offload their shares in the social networking giant.
Back during the initial hours of the Facebook IPO, Thiel sold $640 million-worth of Facebook stock. Add this to his $400 million sale this Thursday and Friday and he has now gained over $1 billion from a relatively measly $500,000 investment in the company 8 years ago.
Thiel’s offloading of the majority of his Facebook stock initially fueled the fears of shareholders that the company is up for rougher seas ahead. The sale of a major stockholder of a company of almost all his shares is sure to send warning signals to investors who hold lesser amounts of shares. After all, Thiel holds a director seat in Facebook because of his holdings in the company.
However, the filing reveals that his sale of Facebook shares was prearranged by him and Facebook when the stock of the social networking giant was at $38. The filing says:
“The sales reported on this Form 4 were effected pursuant to a Rule 10b5-1 trading plan adopted by the reporting person on May 18, 2012.”
Facebook stock continues to trade at below $20 in premarket trading.