In Depth

This Congressman Sold a Lot of Meta Stock Before Big Crash

Rahul Joshua · 1 minute read

Shares of Meta Platforms (META: US) crashed nearly 25% on Thursday after Mark Zuckerberg reported disappointing third-quarter results and issued a weak forward-looking forecast.

Among other things, Meta reported that its Reality Labs unit, which makes AR and VR devices, lost over $9 billion in the first 3 quarters. The company warned that this division will continue to incur losses in 2023 as Meta bets big on the Metaverse story.

Elsewhere, revenues from the core business, social media, are slowing in response to the increasing competition from TikTok and Apple’s iOS privacy update. All these factors contributed to Meta's stock price trading about 75% off the all-time high set in September last year. Later this week, Meta stock fell to levels last seen in early 2016.

Many money managers were reviewing their portfolios on Thursday given that Meta was one of the most owned stocks by hedge fund managers. On the other hand, some other investors, including Congressman Michael McCaul, will feel they dodged the bullet by selling Meta stock to avoid the most recent crash.

Representative McCaul reported earlier in October that he sold Meta stock on four occasions in September. In the first week of last month, Congressman McCaul sold $15,000 - $50,000 worth of META stock via two trades when the stock price closed at $160.32, which is nearly 40% higher compared to today’s price of about $100 per share.

Similarly, Rep. McCaul sold Meta stock twice on September 21 when META closed at $142.12, about 30% higher compared to the most recent price.

Mr. McCaul was actually selling Meta stock throughout the entire last year. For instance, the Congressman sold Meta shares worth between $100,000 - $250,000 twice in early August, in addition to several trades in smaller sizes.

Although McCaul avoided a huge drawdown on his Meta investment, it is worth noting that he was accumulating Meta shares in 2021. He reported 8 buy Meta stock trades in 2021 with entry prices north of $250 a share, sometimes going as high as $336.58. Still, he managed to offload a part of his stake in late 2021 when shares were trading comfortably above the $300 mark.