Another Major Investor DUMPS Facebook

Adding to the Facebook (NASDAQ:FB) lockup expiration story, the company’s first major investor and current board member has sold the majority of his shares.

Billionaire Peter Thiel, partner at venture-capital firm Founders Fund, disclosed late Monday that he sold 20.1 million Facebook shares and distributed another 2.2 million shares to investors as part of a scheduled selling plan, according to a filing with the Securities and Exchange Commission. Thiel raised $395.8 million by selling shares in multiple transactions at prices ranging between $19.69 and $20.68.

Thiel will still retain about 5.6 million shares. He invested $500,000 in Facebook in 2004, when the social media giant was valued at roughly $5 million. The Silicon Valley investor has made more than $1 billion from his Facebook investment, and has invested in other Internet companies such as Zynga (NASDAQ:ZNGA) and LinkedIn (NYSE:LNKD). As co-founder of electronic payments processor PayPal, he served as the chief executive officer until selling it to eBay (NASDAQ:EBAY) in 2002 for $1.5 billion.

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Last Thursday marked the first post-initial public offering lockup expiration for Facebook, bringing 271.1 million new shares to the market and boosting the number available for trade by 60 percent. Early investors such as Thiel, Microsoft (NASDAQ:MSFT) and Goldman Sachs (NYSE:GS) are now able to jump ship. Another 243 million shares are set to be released from lockup between mid-October and mid-November. On November 14, more than 1.2 billion shares will be available for trading and another 149.4 million shares a month later. The final round of lockup expiration does not occur until May 2013, when 47.3 million shares are set free.

Although the Thiel selling may seem like another blow to retail investors, the selling was part of a trading plan established in May. He was committed to the transactions regardless of the recent plunge in Facebook’s stock price. In another much needed positive note for retail investors still holding Facebook stock, the social media company received an upgrade to Buy from Hold by Capstone. Analyst Rory Maher placed a price target of $26 on shares and cited a more attractive risk/reward ratio. Shares closed 5 percent higher on Monday.

Yet, shares of Facebook (NASDAQ:FB) closed down 4.26% at $19.16 on Tuesday.

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