On November 6, Uber’s lock-up period will expire, releasing 1.5 billion shares for trading. Uber’s lock-up is the second largest of a VC-backed IPO ever, behind Alibaba’s 1.6 billion shares. Other notably large VC-backed IPO lock-ups include JD.com (1.3 billion), Pinduoduo (1.0 billion), and Snap (957 million).
In the largest IPO of the year, Uber raised $8.1 billion at an $82 billion market cap, but the initial hype that surrounded Uber’s IPO didn’t follow it to market. The ridesharing giant dropped 8% on its first day and is currently down 25% from its IPO price. That said, early investors and employees are still sitting on large paper gains.
When a company’s lock-up expires, insiders are able to cash in on their shares for the first time post-IPO, which can cause the stock to trade off. In August, Lyft disclosed that it would be ending its lock-up period roughly one month early; its stock traded down 6% on the day of its announcement, while only trading down 2% on the day of its lock-up expiry. More recently, Pinterest’s and Zoom’s lock-ups expired, and both deals have traded down since then. The best performing IPO of the year, Beyond Meat’s lock-up expired yesterday and shares plummeted more than 20%.
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Below we highlight how the five VC-backed companies with the largest lock-ups traded around their expirations. Whereas Beyond Meat’s IPO success may have encouraged early investors to sell off their shares upon expiration and caused a steep drop ahead of hand, historical data suggests Uber’s lock-up expiration won’t be a major catalyst in its trading.
The 5 Largest VC-backed IPO Lock-up Expirations | |||
---|---|---|---|
Company | 2 Days Before | Lock-up Expiration | 2 Days After |
Alibaba (BABA)* | -2% | -3% | -3% |
Uber (UBER) | - | - | - |
JD.com (JD) | -1% | +2% | -3% |
Pinduoduo (PDD) | +2% | +1% | +8% |
Snap (SNAP) | +4% | -1% | -3% |
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