4 Reasons Why Facebook Employees Did The Right Thing By Selling Their Stock Options

When Russian investment group, Digital Sky Technologies, decided to purchase a $100 million of common stock from former and current Facebook employees, no one thought it would cause the frenzy that it has. The program, introduced on July 13th, gave current and former employees and others who held Facebook stock, the option to sell up to 25% or $1 million of their stock to DST.

The offer to sell stock options, was given to current employees first, followed by former employees. Many employees took the offer and sold a portion of their stock. While some would argue that cashing in stock options were premature, even calling the employees mercenaries, I think these employees did the right thing and here’s 4 reasons why.

Economy

As much as we’d like to think we’re pulling out of the depths of this economic downturn, we still have a long way to go. Some of the employees have families to take care of, maybe even dreams of buying a house. This is the perfect opportunity to make some money while they still can. Why should they have to wait till Facebook decides to go public or follow a notion that employees should put in 5-10 years before being able to cash in on their hard work?

Value

Facebook’s value is currently at 6.5 Billion dollars. That’s at a pretty substantial amount. The chances of it increasing may or not be high, but at it’s current rate, stocks are at its peak. This is a safe bet for many, especially those who’ve been through dot come busts and don’t want to wait for another chance to cash in.

Going Public

When it will it happen? If Digital Sky Technologies is offering a $100 million right now, why not take advantage of it? No one knows for sure when and/or if Facebook will go public, so should employees wait till then to cash in their stock options? What if the value decreases by the time it’s public? Without a clear idea of when Facebook will go public, employees did the right thing by selling right now. If in a few years, stocks are valued at a lower rate, then these people will kick themselves in the head for not making the move now. If the stock values end up higher, they’ll still kick themselves but will know they made pretty good money anyway.

Others Waiting to Pounce

Facebook has been growing at a tremendous pace, a pace that has led it to become the fourth largest web site in the world, only trailing Google, Microsoft and Yahoo!. In 5 years, Facebook has turned into a giant, but there’s another social networking platform that’s lurking in the wings, hoping to give Facebook a challenge, Twitter. While Twitter has not come up with a solid business plan, its growth has been astronomical as well, amassing users in the hundreds of millions. The key ingredient to Twitter’s success is the simplicity of the site, the ability text from anywhere to update your followers, as well as the ability to reach more people with a tweet than Facebook. Social networking sites come and go and unless something dramatic happens, Facebook will be another of those sites. The future is always uncertain, and that’s a reason in itself to be safe and cash out while the stocks are still hot.