A Fool Looks Back

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.

Moving on
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.

The Motley Fool owns, and Motley Fool newsletter services have recommended buying, shares of Tesla Motors and Facebook. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

Longtime Fool contributor Rick Munarriz calls them as he sees them. He owns no shares in any of the stocks in this story and is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Motley Fool has a disclosure policy.


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  • Report this Comment On September 01, 2012, at 10:19 AM, Austin77478 wrote:

    "It's a small piece of his total stake in the company."

    The bears like CN and Spencer will beg to differ.

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