Friday, February 14, 2014

First Twitter restricted stock unlock is upon us

The first wave of Twitter (TWTR) restricted stock unlock is about to occur, like this coming week (February 18, 2014). As per the SEC registration for the stock:
  • beginning as early as February 15, 2014, up to an aggregate of 9,867,228 shares of our common stock that are held by our employees who are not executive officers may be eligible for sale in the public market in order to satisfy the income tax obligations of such employees resulting from the vesting and settlement of the outstanding Pre-2013 RSUs for which we expect the service condition will have been satisfied on such date and through the end of the lock-up period (or up to an aggregate of 3,282,859 shares of our common stock held by our employees who are not executive officers if we choose to undertake a net settlement of all of these awards to satisfy a portion of such income tax obligations); and
  • beginning 181 days after the date of this prospectus, the remainder of the shares of our common stock will be eligible for sale in the public market from time to time thereafter, subject in some cases to the volume and other restrictions of Rule 144, as described below.
The SEC registration (S-1):
Tuesday, February 18, 2014 will be the first day that those unlocked shares can trade. Monday is a holiday (Presidents' Day.)
Sure, a fair number of Twitter insiders and investors will be tempted to sell their unlocked stock to lock in gains and to pay for taxes, etc., but the daily trading volume for Twitter is fairly high (12 to 22 million shares a day), so those sales could be lost in the noise of the normal, frenetic trading of TWTR. Or, there should be a short-term dip that could turn into buying once the initial impact of the unlock is out of the way.
My strategy? Wait and see, and be prepared to buy more on any major dips (15% or more.) I might try some option plays as well since I option-enabled my accounts, including a new account I opened with TradeKing ($4.95 trades.)
The 181 day lockup expiration will be a different matter since a much larger number of shares will be in play. There are a total of 544,696,816 shares. Only 70 million were sold in the IPO. That's 181 days from the original registration date of November 4, 2013, which would be May 4, 2014.
-- Jack Krupansky

Sunday, February 09, 2014

Bought Twitter on the dip

Thank you, baboons of Wall Street! I had only a small position in Twitter (TWTR) that I bought at the open on IPO day and had been patiently waiting for a big pullback. The baboons of Wall Street (AKA traders, short sellers, hedge fund speculators, et al) finally granted me my wish. We're still not past the initial 90-day restricted stock lockup expiration, which kept me from buying on the initial dip from $72, but I bought enough shared to double my holdings a couple of hours after the open on Thursday at $51.76, a discount of 31% off the recent peak price of $74.73 on December 26, 2014.
That said, this was only another modest purchase. Sure, it doubled my TWTR holdings, but that only brings it up to my usual holding size for random holdings, not an outsize position such as I hold with Facebook (FB).
It is my intention to eventually ramp up to an outsize position in Twitter, but it still feels too early. I don't expect the absolute rout that Facebook experienced, which let me acquire shares at less than half of the IPO price, but there is the 90-day restricted stock lockup expiration coming up sometime this month, as well as the 180-day restricted lockup expiration coming up in May. In truth, I don't expect a major amount of selling due to either lockup expiration, but it is still possible, so I am prepared.
Also, I think it will take Wall Street another quarter or two (or a lot more!) to gradually get used to Twitter's business and prospects.
In short, I'm still sitting on a fair amount of cash, including my 2014 retirement account contributions (ROTH and SEP-IRA), a good chunk of which I expect will go into Twitter.
-- Jack Krupansky