Facebook Trades Dominate SecondMarket

Facebook accounted for 39 percent of completed trades during the last three months of 2010 on SecondMarket, doubling the previous quarter's transaction on the online venue for trading shares of privately-held companies.

Facebook accounted for 39 percent of completed trades during the last three months of 2010 on SecondMarket, the online venue for trading shares of privately-held companies.

With $157.8 million in completed trades during the quarter, $61.542 million of that would have involved Facebook shares. Based on an implied valuation of $50 billion for the company, at most something like 12 percent of the social network’s stock moved around on SecondMarket during the last three months of 2010. Most likely there was some flipping in the mix, which would mean a smaller percentage of the stock changed hands.

SecondMarket booked twice as many transactions during the fourth quarter than the third, and additional data suggests people may have come to the site just to get in on the Facebook action. The number of participants surged during that time, as SecondMarket had roughly 15,000 in September and around 40,000 in December, according to the nfographics that the company posted online.

During the month of December, SecondMarket had a surge of participation by employees of the issuing companies. This group accounted for roughly five percent of the buyers and sellers on the site during September and October, then zero in November, and in the last month about half of the people on the site were so-called insiders. The total number of participants went from about 25,000 in November to 40,000 in December — we can only speculate about how many of them were from Facebook.

We wonder whether this kind of volume will continue in 2011, now that Goldman Sachs has added its name to the list of investors in Facebook shares. Activity on SecondMarket would provide a crystal ball for planning whether and when to take the social market public. Pricing for such an offer would also take a cue from the activity on the private marketplace.

Readers, do you think this kind of trading activity is sustainable going forward, both for Facebook and SecondMarket?