September 1, 2012
Investors are rightfully fearful of IPOs these days. Facebook (Nasdaq: FB ) hit a fresh new low on Friday, leading the market to conclude that early backer Peter Thiel knew what he was doing when he unloaded most of his shares a week earlier.
He's not alone. Dustin Moskovitz, Mark Zuckerberg's Harvard roommate and Facebook's original CTO, began to sell some of his shares a few days ago. This is why investors fear when lockup restrictions expire a few months after a company goes public, freeing insiders and early investors to cash out of sizable stakes.
We've seen plenty of companies, particularly dot-coms that are typically generous with stock- and options-based compensation, take big hits at the time of lockup expirations. However, that didn't happen on Wednesday. Restaurant-reviews website Yelp (NYSE: YELP ) actually saw its stock pop 22% higher on the day its lockup restrictions went away.
The lesson to investors is that there is no such thing as a slam dunk when it comes to investing. Shorting a stock ahead of lockup expirations may seem like a good idea, but sometimes the pessimism is too thick. Sometimes investors bail early. Sometimes stocks bounce back on the unlikeliest of days.
Briefly in the news
And now let's take a quick look at some of the other stories that shaped our week.
- First Solar (Nasdaq: FSLR ) took a hit on Thursday, after Bloomberg reported that the company halted deliveries to a $1.8 billion solar power plant project in Arizona.
- Tesla Motors (Nasdaq: TSLA ) is reportedly ready to introduce its popular Model S sedan in Japan. Tesla plans to introduce the all-electric vehicle in Japan early next year.
- Sirius XM Radio (Nasdaq: SIRI ) CEO Mel Karmazin has adopted a trading plan that will automatically unload up to 30 million shares of his stake over time. It's a small piece of his total stake in the company.
There's a new premium report on Facebook detailing the opportunities and challenges in store for its shareholders. The report includes a full year of updates, so time's ticking. Check it out now.