The hypothetical sale price of his Facebook stock holdings, based on what people are paying/receiving for other shares of that stock that are actually being bought/sold, dropped by $16 billion in one day.

There’s a difference.

If I buy a house for $100,000 and a few years later I discover that if I sold it today I would probably only be able to get $50,000 out of it, I haven’t lost $50,000. I still have the house. I still have the use of the house. And I will always have had any previous income or cost of living savings that house has generated for me while I’ve had it. My supposed “net worth” would have taken a $50,000 hit, but I would only “lose” $50,000 if I sold it at that moment for that price.

In Zuckerberg’s case, it’s a damn sight more hypothetical than that.

Suppose everything was going swimmingly at Facebook and the site’s founder and largest shareholder suddenly announced he was selling all of his stock. What do you think would happen? His stock is “worth” what it’s “worth” partially based on the fact that he’s holding on to it. If he suddenly decided to dump it, its price would take a massive dive long before he could unload all those shares.

Zuckerberg didn’t walk into a basketball stadium sized room filled with currency and find $16 billion missing or anything like that.

Which is not to say that the stock price drop was good news for Facebook or for Zuckerberg, of course. Although it might be. If he thinks the company still has a bright future, he probably took a bunch of the cash that he does have lying around and bought up a bunch of those suddenly cheaper shares in the expectation that not too long from now those additional shares will more than make up for the temporary $16 billion dip in his “net worth.”

Imported from the original KN@PPSTER