Investing in technology is always a gamble. It goes up and down, both in the amount of money invested as well as the number of investors themselves. We’ve recently seen a large influx of money being invested that has been replaced by a more recent freeze due to America’s financial woes. That can be expected.
What isn’t as expected (and much more alarming) is the increase in the number of employees at the tech companies themselves cashing out their shares.
There’s nothing better than inside information. Insider trading may be illegal, but when employees with equity sell of their shares, it’s a sign that triggers real-money investors to shy away or follow suit and sell their own investments. This lack of confidence from the inside is terrifying with the current state of the economy.
Employees see the writing on the wall. They read the rags and realize that in many cases, such as with Facebook and Groupon, their employers may have already peaked in value. The incentive of ownership is used as a way to build both loyalty and productivity. Employees who are selling off their shares send a terrible message to the investors. When they believe that their employers have reached their value pinnacle, their sell off can trigger the fulfillment of their own doubts.
It needs to stop. Unfortunately, it won’t.
Our friends at Focus took a deeper look into the trend with this infographic. Click to enlarge.