When a company does an IPO, there is usually (maybe always) a “lockup period” where those who hold shares before the IPO cannot sell them (or some of them) until the lockup expires. It is my understanding that the point of this is to keep from flooding the market with too many shares before the price has stabilized.
You can Google (for example) “MDB IPO” and you’ll find a page like this: https://www.nasdaq.com/markets/ipos/company/mongodb-inc-7846…
You can see there that the lockup period expires on 4/17/2018. On this date, the insiders who have been “locked up” for months since the IPO will have a chance to sell their shares. I have not verified this, but according to this article there are 39M of these shares: https://seekingalpha.com/article/4161604-mondodb-move-lower-…
Please note that this article is a short article. I do NOT recommend shorting MDB, or any stock.
If anyone can refute the article I’d love to hear it. But whether the 39M is misleading or not, I am being very cautious of MDB shares for the present. I have seen stocks react in various ways to share lockup expiration, and I do not have enough experience to have a good feel for how this one will go.
Just a little PSA as we strive together to be more informed investors.
Bear
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If anyone can refute the article I’d love to hear it. But whether the 39M is misleading or not, I am being very cautious of MDB shares for the present. I have seen stocks react in various ways to share lockup expiration, and I do not have enough experience to have a good feel for how this one will go.
OK…I will refute it…here:
http://discussion.fool.com/imho-regardless-of-the-amount-of-stoc…
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And I
I would expect insiders to sell part of their holding at the end of lockup but nowhere near 100%. I would also expect them to dribble out these sales. If they were to sell 10% of the Class B shares in 12 monthly installments that would be an average volume of 15,000 shares daily. Current average volume = 380,773 shares.
http://discussion.fool.com/normally-i-do-not-care-about-such-thi…
Next week you’ll find out if the sky fell in or not. 
Denny Schlesinger
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Bear,
No one knows for sure, but after having invested through several of these ends of lockups, I have a feeling, after comparing several other tech lockups, that MDB should be ok. There is so much talk about how great they’re doing from clients that they aren’t nearly in the same tranche as companies like GOPRO (way, way overpriced @ IPO) or FEYE (also overpriced, and ran up 100% before shares were unlocked).
The negative is the small number of shares available, but unless these guys are dumb, I doubt they would dump shares while the price is dropping even a small amount. I would expect them to sell some, yes, but dump them all probably isn’t in the cards.
90 days after the thaw most companies have moved above their price @ thaw, depending on 1) their reputation, 2) their IPO pricing and 3) stock performance to date.
Personally, I don’t care. If it climbs, I’m in for 5%. If it drops, I’ll probably double my position unless I hear something negative in the meantime. My only real concern is stock-based compensation and I will be watching that closely for any change.
Dan
4 Likes
Hi Bear,
I can’t refute the short article but the author wrote in that piece:
“Currently MDB trades in the $42 to $43 range, slightly higher than its IPO price of $24.”
Math is hard. I wouldn’t worry about his article.
John
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