Business, Economics and Jobs

Fidelity funds sells its Facebook stock


Facebook founder and CEO Mark Zuckerberg delivers the opening keynote address at the f8 Developer Conference April 21, 2010 in San Francisco, California.


Justin Sullivan

Fidelity Investments, one of Facebook's earliest and largest investors, sold off 1.9 million shares of Facebook stock in the month of June, according to Business Journal. 

Sixteen of the 21 funds that sold shares dumped more than a quarter of their stakes in the company, the Wall Street Journal reported. Things aren't looking up for the social media giant from there. On Wednesday, Facebook shares fell another 6.2 percent to a record low for the company, with closing shares selling at $20.88. Its initial public offering was $38 a share. 

According to the Wall Street Journal, in the spring of 2011, two dozen of Fidelity's funds bought more than $200 million worth of the company's private stock. In May, when Facebook went public, many of those funds and other Fidelity funds purchased more stock in publicly traded shares. 

Michael Lipper, president of investment-advisory firm and mutual-fund consultant Lipper Advisory Services, hinted to the Wall Street Journal that Fidelity may have thought they would be able to make a quick buck off the stock, saying, "Some of these funds clearly thought it was going to be a hot deal that they could flip."

But Fidelity's decision to sell wasn't a company-wide trend. According to the Boston Globe, 19 Fidelity Investments fund managers sold 1.7 million Facebook shares in June, while 16 funds added 2.8 million more shares to their holdings, according to data provided by Morningstar Inc., a Chicago fund-tracking firm.

Sophie Launay, a spokeswoman for Fidelity, told the Boston Globe that the firm’s portfolio managers don’t always make the same moves. “The portfolio managers here make decisions every day. Especially in this period of market volatility, you want managers who act on what is the best interests of the shareholders.”

Rebecca Lieb, an Altimeter Group analyst, told Venture Beat that people shouldn't give up on Facebook just yet. “This is an eight-year-old company. When Google went public, they had only recently developed ad products. Facebook is at the beginning of mobile products, advertising products — and it hasn’t even started with commerce products.”