Shares Of Twitter Locked Up Following Release Of Its IPO
A lockup was implemented on the shares of Twitter following its initial public offering recently. Ordinary employees of the company will be allowed to start selling around 9.9 million shares on February 15, 2014 in order to deal with income tax expenses for their shares of the company. However, this represents only one percent of the total shares outstanding of the company.
On the other hand, company executives, officers and owners of big volumes of the shares of Twitter cannot sell their shares before May 6, 2014 or 181 days after the release of the IPO of the company.
The lockup of 181 days will be a relief for investors since it will reduce a good amount of pressure on the newly-released stock, according to IPO Desktop Premium’s Francis Gaskin.
The 181-day lockup shows a return to the past norms with the release of IPOs. With the release of some high-profile tech companies, a number of investors started selling shares earlier. When Google released its IPO, investors were able to sell their shares 15 days after the IPO.
The lockup on the IPO shares of Twitter was considered as a reaction to the troubled IPO of Facebook. Twitter appeared to avoid the fear of continuous pressure on their stocks that may result from a series of unlocks. When the Facebook IPO was released, 268 million shares were made available within 91 days after the IPO was released.
The lockup on the shares of Twitter also allowed investors to focus on the efforts of the company in turning in a profit. The company is aiming to find ways in making a profit to allow it to justify its huge market value.
The lockup will also increase the patience of investors in the initial months after the release of the IPO of Twitter. University of Florida’s Jay Ritter indicated that the lockup on the shares of Twitter will increase confidence on the fact that insiders will not dump their shares at the first available chance.