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We are about to get a very insider opinion on just how well SNAP is doing. I mean if there's a huge deluge of shares coming available for trading on lock up ex
by chollida1 9y ago
We are about to get a very insider opinion on just how well SNAP is doing.
I mean if there's a huge deluge of shares coming available for trading on lock up expiry date then that's can be taken as a pretty bearish sign that employee's don't like where the company is going.
Are employee's going to be scrambling to cash out on the first day or are they gong to hold onto their shares because they feel they'll be worth much more in the future?
SNAP did just start having options trading for it so that should help a bit to relieve the short pressure.
> Traders also own more bearish put options than bullish call options, with put open interest being about 70 percent larger than the number of calls outstanding Wednesday, data compiled by Bloomberg show.
This actually seems just as important as the short exposure.
EDIT Just so I don't sound like a heartless ass.... No one is saying employee's should sell stock and diversify, that's just prudent.
But there is a huge difference from employees selling 20% of their holdings vs 50%+ on the very first day/week they are allowed to sell.
- jonas21 9y ago> if there's a huge deluge of shares coming available for trading on lock up expiry date then that's can be taken as a pretty bearish sign that employee's don't like where the company is going. Is it really? If a large portion of your net worth is in shares of a single company that you also work for, wouldn't it make sense to sell your shares even if you think the company is going to do well?
- Beltiras 9y agoDepends on how you time it and what you think the prospects are. Skittish Facebook employees missed out on a quadrupling of value if they sold in the first six months.
- Stasis5001 9y agoSure, and what about skittish Groupon employees?
- IanCal 9y agoI think there's a reasonable thing to add and that's risk. I might be more willing to accept a guaranteed £X than a 20% chance of a £10 * X payout, depending on the X. My personal investment philosophy generally would recommend pulling out large single investments into broader funds even though the potential top payout drops.
- module0000 9y agoKeep in mind facebook employees are not in any way/shape/form "halfway decent traders". The halfway decent trader group will take profit off the table the moment they can - if at some later time it looks like there is a profitable long position to be had then they take it. Amateurs take/hold positions when there is nothing happening at that moment. tldr; You don't hold something because you think it will go up. You open long when it is going up and you think it will continue. The reason for the 90/90/90 statistic is because of mindsets like those facebook employees you mention.
- gwern 9y agoAny IPO will have people predictably diversifying and cashing out, which ought to be priced in.
- prostoalex 9y agoThe mechanics of "pricing it in" generally involves options or naked shorting. Neither are available immediately after the IPO.
- gwern 9y agoOr simply not buying.
- Retric 9y agoSure, which is why the real question is do these people sell 40% or 100%. And how quickly they sell. IMO, as soon as you can reasonably take 5 million of the table do so. Taking risks after that is plenty rational.
- prostoalex 9y agoExactly. Most SNAP employees with significant stock grants are likely talking to financial advisors, and the boilerplate message from financial advisors is "hold if you're already idependently wealthy, diversify otherwise". Too many stories of employees getting the short end of the stick after the IPO (GRPN, ZNGA, LC, TWTR).
- martinald 9y agoAlternatively people want to take some risk off the table - and hedge their options. A lot of employees are going to have a lot of money locked up in SNAP options and this let's them "diversify" the risk.