Anyone thinking about buying Groupon stock - check LinkedIn's after November when the lock-up agreement expires. LinkedIn, like many IPOs, had a lock-up agreem

Anyone thinking about buying Groupon stock - check LinkedIn's after November when the lock-up agreement expires. LinkedIn, like many IPOs, had a lock-up agreement. That means that insiders and venture capitalists (or investors who bought the stock pre-IPO on a secondary marketplace like SharesPost) can’t sell stock for six months following an IPO. This helps stabilize the stock in its early days. It also leads to possible dips in stock value around the time of expiration. The agreements for LinkedIn will expire in November. http://www.investmentu.com/2011/August/linkedin-good-company-bad-stock.html http://www.investmentu.com/2011/August/linkedin-good-company... In Matt Taibbi's book, Griftopia, most of these stocks are little more than pump & dump operations by finance industry, who collect some fees on the side. Here’s how it works: Say you’re Goldman Sachs and Worthless.com comes to you and asks you to take their company public. You agree on the usual terms: you’ll price the stock, determine how many shares should be released, and take the Worthless.com CEO on a “road tour” to meet and schmooze investors, in exchange for a substantial fee (typically 6–7 percent of the amount raised, which added up to enormous sums in the tens if not hundreds of millions). You then promise your best clients the right to buy big chunks of the IPO at the low offering price—let’s say Worthless.com’s starting share price is 15—in exchange for a promise to reenter the bidding later, buying the shares on the open market. Now you’ve got inside knowledge of the IPO’s future, knowledge that wasn’t disclosed to the day-trader schmucks who only had the prospectus to go by: you know that certain of your clients who bought X amount of shares at 15 are also going to buy Y more shares at 20 or 25, virtually guaranteeing that the price is going to go past 25 and beyond. In this way the bank could artificially jack up the new company’s price, which of course was to the bank’s benefit—a 6 percent fee of a $500 million or $750 million IPO was serious money. Taibbi, Matt (2010-11-02). Griftopia: Bubble Machines, Vampire Squids, and the Long Con That Is Breaking America (pp. 213-214). Spiegel & Grau. Kindle Edition.