Breaking Analysis: False Alarm on Fire Sale of Facebook’s Inside Shares

Yesterday the lock-up expiration of shares held by Facebook insiders put 777 million shares up for free trading. Expectations were high as everyone looked for signals as to Facebook’s future from inside stockholders, but there were no major stock dumps.

Investment firm Andreessen Horowitz was rumored to have been selling a large portion of its stake; however in actuality, they only sold a little over half of their holdings. SiliconANGLE Founder John Furrier weighed in on the investment firm’s actions by saying that typically, selling over 30% of shares is usually a red flag, but in this case, he said as a venture capital company, he doesn’t blame them, and they are still retaining 3.6 million shares.

So far, Mark Zuckerberg has only sold shares to cover tax obligations and has donated some to a charitable foundation. He has pledged not to sell any of his holdings until September 2013. Furrier believes this strategy is Zuckerberg’s way of telling the world he has faith in his company for the long haul, and that his reasons for selling to cover taxes is legitimate. Furrier said once Facebook finds its revenue model, it will be smooth sailing. He said, “It’s still choppy waters for Facebook.”

However, Furrier said that investors will still not believe anything Facebook does will produce revenue growth in the mobile market, mainly because they don’t understand what Facebook is doing. He said, “Nobody really gets Facebook. We are in a major transition around social media and social distribution . . . people do not get Twitter, they do not get Facebook.”

Mark Cuban has spoken out publicly about his disbelief and doubt regarding Facebook’s latest revenue models. Furrier said Cuban is totally plugged into social media and does not misvalue anything. Furrier said that Cuban highlights a major point, in that Facebook does not have a revenue model. Furrier compared Facebook going public without a revenue model to changing the engine of an airline in mid-flight, and that right now, he said, is killing them.  See the entire segment with Kristin Feledy and John Furrier on the Morning NewsDesk Show.