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F5 Networks, Inc. Message Board

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  • runlong_1999 runlong_1999 Nov 18, 1999 6:10 PM Flag

    may have a chance to buy at 130...

    Lockup releases are so incredibly overrated.
    Every short on every message board of every IPO always
    starts typing in ALL-CAPS about the "dreaded" lockup
    release. Yet if you do any historical study at all of the
    effect of lockup releases you would see that they are
    nothing but the smallest blips. The "huge" drops that the
    shorts predict virtually never materialize. Yes, the
    stock will almost always drop due to simple economics.
    It takes a few days for the new shares to be
    absorbed.

    But no lockup release has EVER hurt a
    GOOD company. Intel, Microsoft, AOL...they've all had
    lockup releases. Want a more recent example? Look at
    ARBA, its lockup period ended last month and that
    sucker has flown to the moon since then.

    Insider
    selling at the end of a lockup is also NOT an indication
    of trouble at the company. These insiders have
    usually received a large portion of their compensation in
    stock options/grants in the prior years. It's like they
    accept a lower salary for the potential gain on the
    company going public down the road. These individuals
    simply sell to finally get some cash for personal
    reasons, regardless of where the price of the stock is
    at.

    In addition, there is actually a HUGE benefit to the
    lockup releases in the long run. They create liquidity.
    Many large institutions will not invest in IPO's with
    small floats because they cannot take meaningful enough
    positions in the stock to impact their funds performance
    without driving the price of the stock too high while
    they are trying to buy it. But guess what? If it's a
    good company, they wait for the lockup to end, watch
    the stock drop and then buy in knowing they won't
    jack the price up with each buy order.

    Now that
    you are informed, the next time you read a short that
    says "THIS STOCK WILL TANK TO ZERO AFTER THE
    LOCKUP!!!!!!", you can join the rest of the knowledgable
    investors in laughing at the moron.

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