Lifted in toto from iBankCoin:
Fitbit Screws Over Shareholders
This is extremely commonplace for virtually all new IPOs. Legacy shareholders hit the escape hatch, almost immediately, thru gigantic share offerings, which not only hurt the morale of the after market shareholders, but also the supply and demand of the shares. The result, more often than not, is a massive move lower, as was the case in FEYE, SHAK, SPLK, GPRO, HABT–just to name a few.HT: Abnormal Returns
Fitbit files for 7 mln share offering of common stock; also files for 14 mln share offering of common stock by selling stockholdersAnother cool thing companies are doing for insiders, such as kick ass VCs like Fred Wilson, is permitting them early exit from lock up periods, with permission from the awesome underwriters, like Morgan Stanley.
Fitbit also announces that Morgan Stanley & Co. LLC, on behalf of the underwriters of Fitbit’s initial public offering in June 2015, at the request of Fitbit, has agreed to release the lock-up restrictions for Fitbit’s employees and consultants as of October 31, 2015 with respect to ~2.3 million shares, which represents up to 10% of the shares of Fitbit common stock, options, and restricted stock units held by such employees and consultants. The release will be effective on November 4, 2015.The one overarching trend in all of this perfidy is they literally give zero fucks about their current shareholders. I’ve had very heated debates with upper management about their incessant dumping of stock on the makret, so soon after IPO. They all say the same shit. They blame the VCs or majority shareholders whose business model stipulates that they sell stock as soon as it comes public, because they primarily invest in private compannies.
Lesson to be learned: don’t buy VC backed IPOs until 1-2 years after their debut on public exchanges. Think of all of the money you would’ve saved using this approach.