[hamami]

I believe Snapchat founders also agree with you, which is why they rushed to IPO as soon as Instagram and Facebook released stories. In a few months when the lockout period expires and employees are able to sell their stocks, I expect to watch the stock tumble to never come back up..

[bigtimeidiot]

>employees are able to sell their stocks, I expect to watch the stock tumble to never come back up

You expect the employees to start dumping their stock at fire-sale prices? Otherwise, how do prices tumble in a market? The buyer and seller have to agree on price.

[acchow]

Lol. Everyone thinks they can predict the stock market and no one else can. Like only they know about the lockout period and the hordes of shareholders buying it today at $20 have no idea a drop in a few months is near-inevitable.

[hamami]

Lockout period ending is not necessarily a problem with IPOs. However, a rushed IPO where fundamentals can't justify the valuation, already slowing growth story and risk of envelopment by Facebook's Instagram stories; these are some serious red flags.

[yellow_postit]

I'm sure there is all sorts of financial wisdom I'm unaware of in this space, but I would expect most employees to lock in a decent bit of real cash value at lock out while still maintaining some stake in hopes of future appreciation. If you've been trading real money for paper money for some number of years it seems that the rationale move would be to lock in some non-trivial gains.

[hamami]

I think Snapchat is currently already overpriced, so I don't agree with your comments that it's fire sale prices, but only time will tell :) Note that I don't own any long or short position on the stock.

[bigtimeidiot]

>I think Snapchat is currently already overpriced

I agree.

My point is that unless those employees choose to sell their stock at below market prices (for whatever reason), then market prices won't budge. Stock prices don't fall because lots of people decide to sell; people are selling stock all day, every day, yet prices rise. It's all about that price and company prospects.

I probably being overly pedantic.

[adventured]

> Stock prices don't fall because lots of people decide to sell; people are selling stock all day, every day, yet prices rise. It's all about that price and company prospects.

In fact stock prices frequently fall because lots of people decide to sell. You're positing a premise that only exists in theory, and will never actually occur in fact as it pertains to the stock market. If you dramatically increase the number of sellers, the stock will go down. The sellers don't just sit there, holding their ask, they lower their ask to try to get out of the stock they want to sell. That incremental process, lowers the stock, and then lowers it some more, and then keeps lowering it. More selling interest than buying is exactly what causes stocks like Twitter to plunge off a cliff.

Your premise is that the wave of sellers are just all going to hold their ask prices firm (rather than competing and lowering their ask to get their shares sold). That has never happened and will never happen in actual trading.

[hamami]

I agree with you that only employees selling won't make it crash or anything, and I don't expect any big investors to sell; however unless they come up with a solid ad-monetization + continued growth strategy I expect it to follow TWTR's pattern leading up to the lockup (Jan-Apr 2014 -40%) and go even lower shortly afterwards (May 2014 -20%).