Comment by chollida1 | Hacker News Reader

Comment by chollida1 | Hacker News Reader

We are about to get a very insider opinion on just how well SNAP is doing.

I mean if there's a huge deluge of shares coming available for trading on lock up expiry date then that's can be taken as a pretty bearish sign that employee's don't like where the company is going.

Are employee's going to be scrambling to cash out on the first day or are they gong to hold onto their shares because they feel they'll be worth much more in the future?

SNAP did just start having options trading for it so that should help a bit to relieve the short pressure.

> Traders also own more bearish put options than bullish call options, with put open interest being about 70 percent larger than the number of calls outstanding Wednesday, data compiled by Bloomberg show.

This actually seems just as important as the short exposure.

EDIT Just so I don't sound like a heartless ass.... No one is saying employee's should sell stock and diversify, that's just prudent.

But there is a huge difference from employees selling 20% of their holdings vs 50%+ on the very first day/week they are allowed to sell.

> if there's a huge deluge of shares coming available for trading on lock up expiry date then that's can be taken as a pretty bearish sign that employee's don't like where the company is going.

Is it really? If a large portion of your net worth is in shares of a single company that you also work for, wouldn't it make sense to sell your shares even if you think the company is going to do well?

Depends on how you time it and what you think the prospects are. Skittish Facebook employees missed out on a quadrupling of value if they sold in the first six months.

Sure, and what about skittish Groupon employees?

I am quite sure the counterexamples are more numerous. As insiders they had more information than the general market.

Well that's kind of the point about watching to see what happens when insiders are allowed to sell...

I think there's a reasonable thing to add and that's risk.

I might be more willing to accept a guaranteed £X than a 20% chance of a £10 * X payout, depending on the X. My personal investment philosophy generally would recommend pulling out large single investments into broader funds even though the potential top payout drops.

Keep in mind facebook employees are not in any way/shape/form "halfway decent traders". The halfway decent trader group will take profit off the table the moment they can - if at some later time it looks like there is a profitable long position to be had then they take it. Amateurs take/hold positions when there is nothing happening at that moment.

tldr; You don't hold something because you think it will go up. You open long when it is going up and you think it will continue. The reason for the 90/90/90 statistic is because of mindsets like those facebook employees you mention.

Any IPO will have people predictably diversifying and cashing out, which ought to be priced in.

The mechanics of "pricing it in" generally involves options or naked shorting. Neither are available immediately after the IPO.

Or simply not buying.

Sure, which is why the real question is do these people sell 40% or 100%. And how quickly they sell.

IMO, as soon as you can reasonably take 5 million of the table do so. Taking risks after that is plenty rational.

Exactly. Most SNAP employees with significant stock grants are likely talking to financial advisors, and the boilerplate message from financial advisors is "hold if you're already idependently wealthy, diversify otherwise". Too many stories of employees getting the short end of the stick after the IPO (GRPN, ZNGA, LC, TWTR).

Alternatively people want to take some risk off the table - and hedge their options. A lot of employees are going to have a lot of money locked up in SNAP options and this let's them "diversify" the risk.

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