Believing in your company and holding most of your net worth in its stock are two different decisions. It's possible to feel strongly about the first and still want to rethink the second.
There's no single official threshold. Guidance from major wealth management firms commonly treats one stock making up more than roughly 5% to 20% of your investable net worth as a concentrated position. After a liquidity event, many employees find themselves far above that, sometimes with half or more of their net worth in one company. The larger the share, the more one bad quarter, or worse, can affect your whole financial picture, including goals that have nothing to do with work.
A net worth based on today's stock price is a snapshot. It becomes spendable only when shares are sold, and then only after taxes. Public stocks can move several percent in a day for reasons unrelated to a company's long-term value, such as broad market moves or sector news. A large one-day swing in your paper net worth usually isn't information that calls for action.
Selling a concentrated position gradually, sometimes called staged or systematic selling, spreads out three things:
A 10b5-1 plan can automate this by committing to sell set amounts on a schedule. See lockups, trading windows, and 10b5-1 plans.
Some people feel that selling their company's stock is betting against it. It isn't. Diversifying is about protecting your own financial life from any single outcome, and many people who believe deeply in their companies diversify for exactly that reason.
Beyond selling, some advisors use strategies such as exchange funds, which pool concentrated positions from many investors, or giving appreciated shares to charity. These have their own costs, rules, and eligibility requirements. See giving with appreciated stock.