4 ms·
Insiders cashing out is more important than anything apparently
by ganitarashid 7y ago
Insiders cashing out is more important than anything apparently
- deleted 7y ago[deleted]
- cj 7y agoInsiders can't cash out until after the lock up period, after which the price should have stabilized to whatever the market think it's worth, right? (So the IPO price isn't as important as the price the market settled on a few months later, by that logic) Or is that thinking too simplistic?
- dymk 7y agoEarly investors are not necessarily subject to lockouts
- oarsinsync 7y agoUnfortunately, yes. Softbank has taken out loans secured with Uber stock during the lock up period. If the value of Uber tanks, Softbank retains the money, and the bank takes the stock. Softbank has effectively sold their stock ahead of time, removing any downside risk. On the flip side, if Uber stock goes up, Softbank can sell their Uber stock (post-lockup) at a profit, pay back the loan, and enjoy all the upside reward. I'm reasonably sure I've read reports that they've taken out secured loans on their Wework stock too. Effectively sold the downside risk before IPO. Also, depending on what category of investor you are, you have liquidation preferences. You may be the one providing the stock that's being sold at IPO.
- skinnymuch 7y agoIn the We Co. case at least, selling the stock at a $10B valuation won’t do SoftBank much good when they’ve plowed $9B into the company. It’ll be interesting if they indeed have taken out these loans against We stock. And especially how much.
- wayoutthere 7y agoExecutives often “contribute” stock to IPOs. Their share classes effectively don’t have a lockout. Tech equity is a feudal system.
- ddalex 7y agoSocialize the losses, quick!