The Biggest Thing for Twitter (TWTR) Shareholders to Fear
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Twitter (NYSE: TWTR) shares are down 3.5% this AM as traders react to a valuation downgrade at Macquarie. The problem is, the past 5 'valuation downgrades' did nothing to impact the stock. In fact, shares surged in the face of all of them. Traders are already saying BTFD, or "buy the f**king dip." It has worked all too well for Twitter shares. However, one thing that could really put a crimp in these dip buyers style is the lock-up expiration. And a huge one it will be...
This from the company's S-1 filing:
"Upon completion of this offering, stockholders owning an aggregate of up to 386,952,743 shares will be entitled, under contracts providing for registration rights, to require us to register shares of our common stock owned by them for public sale in the United States. In addition, we intend to file a registration statement to register 209,449,274 shares reserved for future issuance under our equity compensation plans, including shares reserved for future issuance pursuant to options under an equity compensation plan that were assumed upon completion of our acquisition of MoPub. Upon effectiveness of that registration statement, subject to the satisfaction of applicable exercise periods and expiration of the market standoff agreements and lock-up agreements referred to above, the shares of our common stock issued upon exercise of outstanding stock options or the vesting of RSUs will be available for immediate resale in the United States in the open market."
With its IPO, Twitter only floated 70 million shares. Shortly, hundreds of millions of shares will be available to be sold. With investors up 182% since the IPO price, not to mention their initial investment, many will take some chips off the table.
Just as Twitter's low float has shifted the supply/demand imbalance in the bulls favor, once these shares are available to be sold it will push it the other way.
The official lock-up expiration is 180 days, or May 6, 2014. However, based on the language in the filing, an offering or share registration could come much sooner.
This from the company's S-1 filing:
"Upon completion of this offering, stockholders owning an aggregate of up to 386,952,743 shares will be entitled, under contracts providing for registration rights, to require us to register shares of our common stock owned by them for public sale in the United States. In addition, we intend to file a registration statement to register 209,449,274 shares reserved for future issuance under our equity compensation plans, including shares reserved for future issuance pursuant to options under an equity compensation plan that were assumed upon completion of our acquisition of MoPub. Upon effectiveness of that registration statement, subject to the satisfaction of applicable exercise periods and expiration of the market standoff agreements and lock-up agreements referred to above, the shares of our common stock issued upon exercise of outstanding stock options or the vesting of RSUs will be available for immediate resale in the United States in the open market."
With its IPO, Twitter only floated 70 million shares. Shortly, hundreds of millions of shares will be available to be sold. With investors up 182% since the IPO price, not to mention their initial investment, many will take some chips off the table.
Just as Twitter's low float has shifted the supply/demand imbalance in the bulls favor, once these shares are available to be sold it will push it the other way.
The official lock-up expiration is 180 days, or May 6, 2014. However, based on the language in the filing, an offering or share registration could come much sooner.
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