Shares of Twitter Inc fell more than 10 percent in early trading on Tuesday after the expiration of a six-month “lock-up” period for early investors that had restricted the sale of about 82 percent of the company’s equity.<\/p>\n
The shares hit a low of $34.84 on the New York Stock Exchange, the first time they have fallen below $37 since the shares started trading on November 7.<\/p>\n
Twitter’s IPO was priced at $26 per share.<\/p>\n
The reaction to Twitter’s lock-up expiry was in sharp contrast to that of Facebook Inc in late 2012.<\/p>\n
Facebook shares jumped 13 percent on November 14, 2012 when its lock-up expiry of roughly 800 million shares did not trigger an immediate wave of insider selling.<\/p>\n
Twitter’s lock-up involves about 470 million shares.<\/p>\n
Tuesday’s selling placed even greater pressure on the stock, which has been trading at an all-time low since April 29 when Twitter disclosed sagging usage metrics.<\/p>\n
Twitter has comfortably hit its revenue targets in the two quarters since it went public.<\/p>\n
But rapidly mounting concerns about user growth and engagement levels have wiped out about half of the company’s market value – or about $18 billion – since late December.<\/p>\n
The largest holder of Twitter shares, private equity firm Rizvi Traverse, has no intention to sell upon the expiration of the lockup, a person familiar with the matter said on Friday.<\/p>\n
Rizvi Traverse, which owns about 85.2 million Twitter shares, could not be immediately reached for comment.<\/p>\n
Twitter co-founders Jack Dorsey and Evan Williams and Chief Executive Dick Costolo said in April that they did not plan to sell shares after the restrictions were lifted.<\/p>\n
Venture capital firm Benchmark, which holds a roughly 6 percent stake, has also said it would not sell its stake.<\/p>\n
But other major shareholders could see an opportunity to cash out, given that none of Twitter’s insiders sold their shares during the IPO.<\/p>\n
Large shareholders include venture capital firms Lowercase Capital, Spark Capital and Union Square Ventures. None could be reached for a comment.<\/p>\n
Many technology companies have a lock-up clause to prevent holders from flooding the market as soon as the company goes public.<\/p>\n
Twitter allowed one batch of shares to be sold in February, but that lockup governed only about 10 million shares, most of which were held by non-executive employees.<\/p>\n
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