Late last week GOOG took a hit, and initially I thought – man, that analyst day did not go well. After all, as the Times (reg req’d) pointed out, the chef presented, but the CFO did not.
But I think it had more to do with this – Google’s last lockup up expires Monday, and some $19 billion of stock comes free to sell. The market more than likely is pricing in the expected selling frenzy.
From the Merc’s coverage:
Karen Brosi, a certified financial planner in Palo Alto, predicts many Google insiders will do just that because they’ve learned an important lesson from their “tech-bubble ancestors.”
“What they know is that stock goes down. They know they have a value on paper. They know the only way to keep that value is to dump that stock,” Brosi said.
Most companies bar workers from selling stock for 180 days after the initial public offering. But the Mountain View Internet search company took the unconventional step of letting employees sell slices of their holdings four times after the IPO in August, and its stock has generally maintained an upward path. Since it went public at $85 it peaked at nearly $211 this month, before slipping back to $187.40 Friday.
It is really fair to post a graph from the high of the stock with out any comparison to how it has done over time? It might be better to compare what happened after each selling period of Google as the lock ups came off. My bet is that it has dropped and come back afterwards. I think the important question is when you look at the value of the big internet leaders, say Yahoo and EBay, does Google
I too believe that the market is pricing in a “Saint Valentine’s Day Massacre.” What else could explain a downdraft after such a pristine fourth quarter, surprising even the most manically bullish analysts?Just as when GOOG first went public, there was lots of press about all the dangers and risks, and precious few about the upside.When’s the last time you read about one of the biggest benefits of the lockup expiration — it’s the last requirement Google needs to meet before being drafted into the S&P 500 index, and mandatory buy-and-hold from the big index funds. More on the S&P 500 prospects on my site, http://www.buygoogle.com.
For those that have WSJ accounts, they have a graphic on the Google lockups and how the stock has performed at each stage.