Welcome to NexusFi: the best trading community on the planet, with over 150,000 members Sign Up Now for Free
Genuine reviews from real traders, not fake reviews from stealth vendors
Quality education from leading professional traders
We are a friendly, helpful, and positive community
We do not tolerate rude behavior, trolling, or vendors advertising in posts
We are here to help, just let us know what you need
You'll need to register in order to view the content of the threads and start contributing to our community. It's free for basic access, or support us by becoming an Elite Member -- see if you qualify for a discount below.
-- Big Mike, Site Administrator
(If you already have an account, login at the top of the page)
Why do IPO's (Facebook) have multiple lockout periods? In the news people are saying FB shares were all time lows because of the 1st lockout period, and I think they have a further 2 more lockout persiods to come.
1. So why have multiple lockout periods (Who says I want 3 lockout periods) ?
2. Who determines how long the lockout periods are ?
Many thanks
Can you help answer these questions from other members on NexusFi?
The answer lies with the IPO organizing banks and reads simply "RISK"
The banks organize the IPO, and calculate a stable price development after the IPO.
So the programmed lockout periods (here FB) are made in reverse sort of risk aversion:
1st lockout: for the involved banks (they hate the higher risk over time)
2nd lockout: for employees (they have to stay and guarantee for the ongoing business and do have little rights for the IPO)
3rd lockout: for the second half of their stocks (highest risk). The first half they already sold
for the guaranteed IPO price on IPO day.
Each IPO is differently organized - so the strongest partners dictate if or how many lockouts and their periods will be.
