Early insider investors in Alibaba Group Holdings (BABA) will get their first chance to offload their shares. This follows the expiry of the three-month holding period after the initial public offering (IPO) back in September.
Will we see the same sort of impact that hit Twitter and GoPro when their lock-up periods expired? You might remember that after Twitter’s lock-up period expired for 82% of its outstanding stock, its share price plunged 18% to hit a new low.
GoPro’s stock is also under pressure as their lock-up expiration, on 23 December, draws close. It’s down over 40% since hitting a high of $93.85 in July. It’s worth noting as well that GoPro’s slide has also been driven by weaker sentiment over the company’s execution of its content monetization strategy.
However, Alibaba investors have so far appeared to be unfazed ahead of the lock-up expiry. The stock last closed at $110.65 after four positive consecutive sessions and it’s up 63% since its IPO.
What may be behind the indifference is the relatively small poll of shares that will be freed from the lock up – just 8.1 million units, which represent about 1.6% of shares currently eligible to trade. What will be more keenly watched are the upcoming lock-up expirations next year in March and September. These involve 429 million shares and 1.6 billion shares respectively.
On a daily chart, there appears to be a support level of $104. At the moment, any dips could present an attractive opportunity to go long. There is a consensus forecast 12-month target of $120.40, according to a Bloomberg poll. There are 34 buy calls, three recommendations to hold and two sell calls.