Some of the big U.S. companies about to go public, including Uber and Pinterest, are sly in a series of shareholder deals, as concerns over Lyft`s performance intensify after a sparkling stock market debut late last month. Some of the biggest IPOs in 2019 will see their blocking periods expire in the coming weeks, allowing European companies to sell their shares. Security software stocks soared on Friday as investors bet that the consequences of one of the most devastating hacks in U.S. history will lead to increased security spending by businesses and government agencies. Pinterest`s lock-in deal with investors who took shares before the company`s IPO in April expired Monday, allowing investors to sell their shares. Such deals are a common practice in an IPO, and analysts say equities tend to slip as investors worry about a flood of new stocks hitting the market. Lyft, whose shares initially jumped but stagnated at a level well below the offer price, last week threatened Morgan Stanley with legal action over a report that the investment bank had held so-called short sales for investors who bought shares, according to a letter from the Financial Times. Other high-level actions are about to end their lock-up agreements. Investors in Ride-hailing App Uber Technologies Inc. will be free to sell shares from November 6. Shares have already fallen 29% after going public in May.
Meanwhile, the blackout period for online pet distributor Chewy`s Inc. expires on December 10. Shares are currently up 22% since they went public in June. James Cordwell, an analyst at Atlantic Equities, said lockdown times can be a good day to buy a stock. “With Lyft, we`ve certainly seen sales pressure – the stock has fallen more than 20 percent since mid-July – and the weather will tell if Monday will be a good buying opportunity,” he said in an email. Join more than 300,000 financial experts who already subscribe to the FT. In August, Barron warned that many of this year`s hottest IPOs would face major tests as their so-called stock-blocking contracts would soon expire. The lockout periods usually occur six months after the IPO. Once they do, most insiders are finally able to sell their shares. We have discovered that other investors – not insiders – often sell shares before the lock-up expiry date, which is expected of a likely weakness in the stock.
Large institutional investors in Pinterest Inc. PINS -0.90% are now free to offload their shares from the online image of consulting firms, sending the stock down nearly 5% this week.