A flood tide of shares is hitting the market in May and June, as a number of the high-profile tech IPOs from the fall emerge from lockup periods, including Jive Software (JIVE), Zynga (ZNGA) and Angie’s List (ANGI).
If you’re one of the employees of the 28 companies whose lockups are expiring in May or June, you’re wondering how to diversify your portfolio and when to sell.
Here’s our research on the question of what to do in the days immediately following the lockup expiration, presented visually to help you see the dip that typically follows the end of the lockup.*
You’ll also notice that it shows the big difference between top-performing and bottom-performing stocks, as well as the average. All three groups of companies experienced the dip, but only some of them later rebounded.
How to tell if your company will be one of those which rebounds? Here’s a blog post that covers that question more in depth: Real data-based guidance on selling stock post-IPO.
Some companies have more than one lockup expiration, which may help mitigate the lockup effect. For instance, in Zynga’s case, the bulk of its shares offered in the IPO – 325 million shares – will emerge from the lockup on May 30. But in early April, Zynga had a secondary offering of 200 million shares to build the float in order to attract new institutional investors. (We expect to have a blog post that discusses secondary offerings soon). The two lockups on that offering, of shares held by directors, officers and some select shareholders, will expire July 6 and Aug. 16.
*The analysis contained in this infographic is based on publicly available data reviewed by Wealthfront for the years 2000 to 2011; past performance is no guarantee of future results.