Facebook delays employee stock sale, citing recession

December 4, 2008 | Eric Eldon

Facebook was planning to let its employees sell some of their stock in the company per an unconventional plan we discovered this summer. But that plan is now on hold; although, from what we hear it hasn’t been called off for good. Of course, given the current economic uncertainty — Facebook’s stated rationale for the change — one wonders when or how it will resume.

The statement given to me by Facebook:

The global economy is in the midst of an incredibly difficult period, and all companies have been affected in some way. After carefully considering the current environment, we’ve decided to establish an open-ended timetable for an employee stock sale program. Despite the turbulence in the financial markets and resulting challenges, we believe the company is very well positioned to handle this economic downturn. We have the means to go after big opportunities that will help solidify our position as the platform that everyone uses to share while building a fundamentally strong business.

Valleywag says it has obtained an email Facebook chief executive Mark Zuckerberg sent to the company this afternoon:

I’m writing this note to let you know some bad news. Despite a lot of work, we have not been able to finalize a plan for the employee stock sale we announced in August.

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About the Author, Eric Eldon

Eric currently covers digital media technology and business, especially what's happening on social networks and their platforms. He writes and edits stories about lots of other stuff, too. He started at VentureBeat in the spring of 2007, half a year or so after Matt Marshall left his reporting job at the San Jose Mercury News to found the site. Eric previously cofounded a now-failed startup called Writewith, that was building editorial software for newspapers and other groups of writers.

  • Jimbotheclown
    What Zuck really means is: We don't want to lower our overly inflated valuation by letting you people sell. There is a risk that free markets would work and re-value the company based on the revenue it is actually bringing in instead of on our sheer number of non-paying users. Instead of letting you--the people who built my company--make a little profit now, I'm going to roll the dice again until we all go down like etoys.
  • Harsh. We shall see.
  • King Khan
    Gee, it's a matter of time before the valuation comes tumbling down. Great personal site but no good revenue model.
  • Private company valuations usually have a qualitative element. Facebook is doing enough other interesting stuff at this point (like Connect) that I almost don't want to see them heavily refocus on revenue. Tough times would mandate a focus on revenue, though, it would seem.
  • can't we just have a private silicon valley offering going on... and forget liquity on the open markets
  • John, I agree. I don't think Facebook's idea of doing an employee stock sale is such a bad idea -- although some investors reading this site would probably disagree. Not sure how a sale would go over for Facebook or any other private company these days, though.
  • Without a silver bullet business model like adwords they will come under pressure to increase the inventory. FB is almost ad-free at the moment compared to MySpace. I have seen bigger banners start to creep in, question is how the users will react after having got used to a low-ad environment.
  • Bruce
    Facebook, without a good profitable revenue model, it is bound to die fairly quick. Consumers aren't willingly to pay for social networking service because of the many free social networking service out there. Social networking with intrusive banner ads or ad words will also be infringing upon the user's interaction when there's already other news information that's cluttering the news feed.

    I think, given about 2 years time, Facebook will shrink and their business will fall flat .
  • Jimbotheclown
    Actually, I think consumers would pay. The addicts would. I would. That is perhaps Facebook's last hope.
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