Facebook Inc. (FB) disclosed Friday that Reed Hastings, chief executive of Netflix Inc. (NFLX), bought about $1 million worth of Facebook stock.
In a filing with the Securities and Exchange Commission, Mr. Hastings disclosed buying 47,846 Facebook Class A stock at an average price of $21.03 per share. In reaction to this news Facebook shares closed trading on Friday at $21.81, up 80 cents, or 3.79%, on a volume of 26 million shares.
Since becoming on May 18 the first American company to hit the market with a value of more than $100 billion, Facebook shares have taken a beating. After barely finishing above its IPO price of $38 on its opening day, the stock has never printed the tape at that price again, making the stock’s performance anything but likeable. In fact, the stock is currently down 43% from its peak, reducing the company’s market cap that currently stands at about $46 billion, by more than 50%. FB still trades at more than 33x times forward earnings, versus Google’s 15.
Hastings, a Facebook board member and the only insider who has disclosed buying stock since the company’s May initial public offering, previously had 20,000 restricted stock units that was granted when he joined the social network’s board in June 2011. Since those shares haven’t vested yet, Hastings’ purchase marks his first stake in the company (it’s certainly encouraging to see one of the company’s insiders think Facebook will grow).
At the same time, software giant Microsoft Corp. (MSFT) says it will probably hang on to its stock once Facebook’s ban on share sales expires next week, a source told Bloomberg on Saturday.
The Redmond-Wa.-based company views the stake as a strategic investment and will be keeping its shares as a way to combat rival Google (GOOG), and not as a near-term way to make money.
Microsoft, which has 26.2 million Facebook shares, or 1.7%, worth almost $572 million, paid $240 million for its stake in 2007, which means that, even with Facebook’s nosedive since its IPO, Microsoft has still made out very well on its initial investment.
Hastings also serves on the board of Microsoft.