Should IPO Tech Stock Owners Sell Now or Hold Out?

Is now a good time for tech stock investors to cash in their stocks following the IPOs of 6 Big Bay Area Tech companies? 

Expectations are running high in Silicon Valley about billions of dollars in disposable income that may be making its way through the region’s economy as investors and employees of tech companies begin to cash out their stock.
Image result for cash out
Photo: Auto Credit Express
But before financial advisers, realtors, luxury car sales reps and high-end services begin to lay out their onslaught of VIP treatments, everyone need to keep in mind when these IPO companies’ lockups will expire. Because until that date, investors who snapped up shares before the IPO and company employees cannot sell their shares.
Related image
Photo: bebee.com
Uber, Lyft, Pinterest, and Slack were among the most notable Bay Area tech companies to go public this year, which also included PagerDuty and Fastly.
Image result for uber going publicPhoto: Vox
“Employees may want a cash payday but, even then, I expect they’d hold on to some shares with the belief that their work will make the stock price go higher,” said Matt Kennedy, a senior IPO market strategist at IPO institutional research firm Renaissance Capital, which also manages exchange-traded funds of IPO stocks.
Renaissance Technologies, spearheaded by James Simons (above) relies on signals from a range of inputs, including technical factors related to stock-price movements, to guide its trades. PHOTO: BILL CRAMER/The Wall Street Journal
Kennedy added that many pre-IPO investors believe in the long-term potential of the companies they have invested in and will often wait years post-IPO before cashing in on some of their shares.
“Based on my experience, most companies’ stocks are trading above their IPO price at the time their lockups expire,” Kennedy said. “I don’t believe that every investor and employee sells shares right after the lock-up.”
However, wealth managers like Andy Rachleff, CEO of Wealthfront, said in a previous interview that employees should sell their stock as soon as they are able since he has found companies’ shares typically decline following a lockup expiration.
Image result for Andy Rachleff, CEO of WealthfrontPhoto of Andy Rachleff, CEO of WealthFront, courtesy of CB Insights
Below is a look at the largest investors in six high-profile Bay Area tech IPOs this year, and when the companies’ employees and pre-IPO investors can begin unloading those shares.

Companies

Related imagePhoto: FlippedLearning.org

1. Slack Technologies
Lock-up Expiration Date: No lock-up date. Shares can be sold at any time.

Shareholders with 5% Stake or Larger:
Slack Employees and Investors: 33.3% stake / $10.4 billion value
Accel: 23.9 % stake / $4.6 billion value
Andreessen Horowitz: 13.3% stake / $2.6 billion value
Social Capital: 10.2% stake / $2 billion value
Stewart Butterfield, Slack CEO and co-founder: 8.6% stake / $1.7 billion value
SoftBank: 7.3% stake / $1.4 billion value
Cal Henderson, Slack CTO and co-founder: 3.3% stake / $646 million value
Image result for lyft
Photo: The Japan Times

 

2. Lyft Inc.
Lock-up Expiration Date: Sept. 24, 2019 (approximate)

Shareholders with 5% Stake or Larger:
Rakuten Europe S.a.r.l: 11.6% stake / $2.26 billion value
General Motors Holdings LLC: 6.9% stake / $1.34 billion value
Fidelity: 6.8% stake / $1.34 billion value
Andreessen Horowitz: 5.5% stake / $1.1 billion value
3. Pinterest Inc.
Lock-up Expiration Date: Oct. 5, 2019 (approximate)
Shareholders with 5% Stake or Larger:
Bessemer Venture Partners: 13.1% stake / $1.13 billion value
Benamin Silbermann, co-founder and CEO: 11.4% stake / $981 million value
FirstMark: 9.8% stake / $843.7 million value
Andreessen Horowitz: 9.6% stake / $827.2 million value
Paul Sciarra, co-founder: 9.3% stake / $805 million value
Fidelity: 7.1% stake / $613.2 million value
Valiant: 6% stake / $514.5 million value
Related imagePhoto: districthallboston.org

4. PagerDuty
Lock-up Expiration Date: Oct. 19, 2019 (approximate)

Shareholders with 5% Stake or Larger:
Andreessen Horowitz: 16.2% stake / $284 million
Accel: 10.8% stake / $189.7 million value
Bessemer Venture Partners: 10.8% stake / $188.9 million value
Andrew Miklas, S28 Capital partner: 6.2% stake / $109.4 million value
Baskar Puvanathasan, co-founder: 5.9% stake / $103.9 million value
Baseline Ventures: 5.9% stake / $103.2 million value
Alex Solomon, co-founder and CTO: 5.8% stake / $101.2 million value
Jennifer Tejada, CEO: 5.7% stake / $105.6 million value
Image result for uberPhoto: Forbes

5. Uber Technologies
Lock-up Expiration Date: Oct. 23, 2019 (approximate)

Shareholders with 5% Stake or Larger:
SB Cayman 2 Ltd.: 12.8% stake / $9.76 billion value
Benchmark Capital Partners: 8.5% stake / $6.49 billion value
Travis Kalanick, Uber founder and board member: 6.7% stake / $5.12 billion
Source: San Francisco Business Times

Comments are closed here.