Peter Thiel, Director, Facebook Inc. hit the news as he sold majority of his shares in the world’s largest social-networking website. Thiel made earnings of more than $1 billion last week after the lock-up on Facebook’s shares expired.

An insider selling shares is never good news for any organization. Thiel, a co-founder of PayPal and a member of the PayPal Mafia, was one of the earliest investors of the social networking site, Facebook.

Just after the lock-up on shares of the social networking site ended, Thiel, like some other insiders, sold around 16.8 million shares at the price of $38 a share, which generated him a great amount of $640.1 million.

On Aug. 16 and Aug. 17, Thiel however, sold another 20.1 million shares in the company, which got him $395.8 million, as per reported in a filing yesterday with the U.S. Securities and Exchange Commission.

A venture capitalist and hedge-fund manager, Thiel invested a whooping amount of $500,000 in 2004, which now got him $1 billion. This made him one of the largest beneficiaries of the firm’s gain before going public. However, later backers of the social networking site haven’t fared as well, with the stock losing almost half its value since the IPO among signs that Facebook’s growth is slowing and concerns that more insiders will exit their stakes. The sales disclosed yesterday were tied to a plan adopted on May 18, Facebook’s first day of trading.

The social networking site unlocked around 271.1 million shares last week.

Shares in Menlo Park, California-based Facebook saw a rise of 5 percent to $20.01 at the close in New York yesterday.

Thiel’s sale proceeded at prices from $19.27 to $20.69 per share, which signified most of his 27.9 million shares he had after the IPO.

However, Thiel still holds more than 5 million shares in the social networking site. It was also reported that Thiel freed up extra shares for sale when he converted more than 9 million shares to Class A from Class B.

As per another filing done yesterday, Accel Partners, another investor of Facebook, dispersed around 50 million shares to its own investors in the venture capital firm’s funds on Aug. 16.

November hopes to bring another challenge for Facebook, when another 1.44 billion shares will go up for sale, belonging to the employees of the social networking site.