Wednesday, March 24, 2010

"A123 Insiders Soon Free to Sell as Lock-Up Period Ends" (AONE)

AONE closed at $15.39 yesterday.
The stock came public last September at $13.50. The first day of trading it closed at $20.29, up 50.30%.
In one of our AONE posts that day:
I don't have an interest in IPO's in general (all the allocation shenanigans, quid pro quo, etc.) but would be remiss if I didn't at least mention this one, the stock is trading at $19.77, up $6.50 (45.5%). This is not a buy rec....
Don't let my proclivities spoil the fun, here's some of the better first day reporting:
First up, representing the Dow Jones blog empire (Heard on the Runway is must read during Milan Fashion week), Environmental Capital:...
I pretty much forgot about the stock as it ran up to $28-something until our October 27 post "What on Earth Has Happened to A123? (AONE)":
Sorry about the disappearing act, reality intruded in the form of BIDU's $80 drop and subsequent $30 rebound.
I just happened to take a glance at A123, the stock had an $18 handle!...
And again it dropped off my radar. Now I'm getting intrigued (but read the links in the above post first).

The chart action, via BigCharts:

Here's the latest, from earth2tech:

Just five more days. And on the sixth day, officers, directors, employees and early investors in A123Systems holding more than 71 million shares of common stock in the battery maker will be free to cash out. While certain volume restrictions can still apply under federal securities law, Monday marks the end of what’s called a “lock-up period,” lasting 180 days from A123’s $371 million initial public offering.

The point of lock-up agreements like those that underwriters secured with A123 insiders ahead of the company’s September IPO is to prevent a company’s stock from gushing too quickly onto the market. Too much stock unloaded in a short period could put a damper on the stock price in early trading.

A123 explained the worst-case scenario in the risk section of its prospectus last fall, writing that when its lock-up agreements with shareholders expire, ”A significant portion of our total outstanding shares may be sold into the public market…which could cause the market price of our common stock to drop significantly, even if our business is doing well.”

A123 notes that shares don’t actually have to be sold en masse to have this effect. Rather, the simple, “market perception that the holders of a large number of shares intend to sell shares, could reduce the market price of our common stock.”>>>MORE