Motricity Shares Plunged: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of wireless services provider Motricity (Nasdaq: MOTR  ) dialed down in a big way today, shedding as much as 17% on huge volume.

So what: When a company goes public, insiders have to agree to not trade in the stock for a certain period of time. This "lock-up" is put in place so that shareholders buying into the IPO don't have to worry about insiders dumping their shares en masse once the deal closes. In the case of Motricity, there has been growing anxiety about the expiration of the lock-up, and the stock has now crossed the magical 180 threshold and insiders are now free to start selling.

Now what: Just because insiders can sell doesn't mean that they're going to. And if today's drop is being driven by concerns over insider selling, then it's a highly speculative move, and likely an overreaction. However, what I think is a more meaty concern is what's informing insider-selling anxiety -- that is, the stock's furious run since its IPO and its current lofty valuation. Will insiders sell in order to take advantage of the high valuation? Maybe, maybe not. But investors who are worried about that should take their own cue, pocket the gains, and find greener (and cheaper) pastures.

Want to keep up to date on Motricity? Add it to your watchlist.

Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Fool contributor Matt Koppenheffer does not own shares of any of the companies mentioned. You can check out what Matt is keeping an eye on by visiting his CAPS portfolio, or you can follow Matt on Twitter @KoppTheFool or on his RSS feed. The Fool's disclosure policy assures you no Wookiees were harmed in the making of this article.


Read/Post Comments (0) | Recommend This Article (4)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1401298, ~/Articles/ArticleHandler.aspx, 10/24/2014 2:06:45 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement