Zuckerberg Sold Facebook Stock, But Investors Shouldn't

Facebook (NASDAQ:FB) CEO Mark Zuckerberg has been painted in a rather negative light recently due to his company’s role in the proliferation of “fake news,” and at the same time, more information has come out regarding Zuckerberg’s plans to sell a massive amount of Facebook stock.

Special Counsel Robert Mueller’s investigation into Russian interference with the 2016 U.S. Presidential election pointed to Facebook as a platform that was widely used to spread misinformation. Amid this investigation, Zuckerberg and Facebook started to implement new policies to help fight the “fake news” problem, including expanding its content and advertising review team.

Meanwhile, Zuckerberg reportedly sold $357 million worth of Facebook shares this month, based on SEC filings. This move is part of a much larger plan to sell billions of dollars worth of Facebook stock in order to fund a charitable donation plan.

Last year, Zuckerberg sold just under $1 billion worth of stock. In September, he announced in an SEC filing that he anticipated selling 35 million to 75 million shares of Facebook stock over an 18 month period in order to fund he and his wife Priscilla Chan’s “philanthropic initiatives” focused on “education, science and advocacy.”

Zuckerberg’s sell-off was expected to be worth between $6 billion and $12.5 billion at the time of the announcement. Since then, shares of Facebook have jumped over 7%, which would value Zuckerberg’s shares at an even higher price tag.

Insider selling can often be a warning sign for stocks, but Facebook investors should look at Zuckerberg’s move to sell as a good thing, as it has nothing to do with a lack of faith in the company. Instead, it seems to signal that he believes Facebook will be a powerful growth-focused business for years to come. And our numbers back up his projections.

Facebook has never been more trafficked or profitable. The company is projected to see its sales surge nearly 42% in the current quarter, while its earnings are projected to jump by 13.82%, based on our current Zacks Consensus Estimates.

Looking ahead to the rest of fiscal 2018, Facebook is expected to see its revenues hit $55.41 billion, which would mark a 36% year-over-year jump. Driven by continued growth outside of the U.S. and ad revenues gains domestically, Facebook is projected to see its fiscal 2019 sales reach $70.23 billion, marking a nearly 27% surge over our 2018 estimates.

Facebook, which is currently a Zacks Rank #2 (Buy), has also witnessed 17 earnings estimate revisions with 100% agreement to the upside for 2018, as well as ten upward estimates for the following year. The firm is also expected to see its earnings expand at an annualized rate of 26.51% over the next three to five years.

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