London Daily

Focus on the big picture.
Sunday, Nov 16, 2025

The struggling IPO class of 2019 could be facing another wave of selling soon

The struggling IPO class of 2019 could be facing another wave of selling soon

Lock-up periods are expiring for new IPOs, which could introduce a new layer of pressure for some already struggling stocks this year.

Shares of 30 recently public companies become eligible for selling between now and the end of this year.

Analysts say that could pressure already struggling IPOs’ performance and dissuade other start-ups from entering public markets this year.

“This does impact the stock price,” says Larry McDonald of research firm “The Bear Traps Report.”

Lock-up periods are expiring for this year’s IPO class, which analysts say could introduce a new layer of pressure for young companies.

Founders, employees and some early private investors who bought in before a company goes public are usually restricted from selling for between 90 and 180 days. Uber, Pinterest, Zoom and others are approaching that expiration date between mid-October and the end of the year.

A flood of selling could weigh on already struggling IPOs and dissuade other start-ups from entering public markets this year, according to analysts. It’s also a reason some in Silicon Valley are lobbying for direct listings, which don’t have the same selling restrictions.

“As lock-ups expire, some of that shortage of supply goes away,” said Nick Colas, co-founder of DataTrek Research. This flood of shares could put pressure on stock prices, he added.

Uber has struggled since its public debut with shares down roughly 35% since. The ride-hailing company is by far the biggest of the newly public companies with shares unlocking in the coming months. Private markets are often opaque, and estimates vary - one by research firm “The Bear Traps Report” puts the total Uber shares unlocking closer to 763 million, worth $22 billion. The same firm says roughly $31 billion worth of public company shares are unlocking from now until the end of this year.

Others have fared better though: video-conferencing start-up Zoom is trading at more than double its IPO price, while Beyond Meat has more than quadrupled in value. Pinterest is up more than 30% since its IPO.

If founders decide to sell around the lock-up date ending, shares flood the market, which DataTrek’s Nick Colas said can be an added drag on stock prices. Colas said early private investors are likely to sell regardless of an IPO’s performance so far this year.

“Their job is to get the company to the private markets, then to sell,” he said. “Venture capitalists are going to sell into lock ups because they have a huge investment in the assets and because their cost basis is so low — they still have a big gain even if the IPO hasn’t performed.”

That can exacerbate a stock dip if people see “smart money” like venture capital selling, he said, creating a false narrative that investors are getting out because a stock is underperforming. In this case, they don’t have much of a choice, because “the job of a venture capitalist is to get their money back, their investment back, and move on to the next thing.”


Employee pressure


Employees often have stock options to buy shares below the IPO price. Tech engineers, for example, might sacrifice stability of a Google or Amazon for a stake in a young company that can pay off big in an IPO. As these companies stay private for longer (a decade in the case of Uber), employees are ready to get some liquidity by IPO day.

“The average employee probably has the vast majority of their personal wealth in stock,” Colas said. “Prudent financial management says you want to diversify - so selling is not really optional.”

The dot-com bubble offers a cautionary tale. Shares of internet companies ran up because there was a shortage of stock. As lock-ups expired, that shortage went away, and public investors went from being able to buy 5% of the company in public markets to buying 30%, 40% or 50%, Colas said. Still, today’s IPO market doesn’t have the ability to rock bellwether tech names that dominate the S&P 500′s market cap.

“If a bunch of IPOs don’t work, it doesn’t mean much for Google stock or Microsoft stock,” Colas said.

Larry McDonald, founder and editor of research platform “The Bear Traps Report,” pointed to Facebook as a more recent example. Shares of Facebook dropped 4% in 2012 as companies were suddenly allowed to sell 230 million shares six months after the lock-up period ended.

“The market wasn’t that great to begin with, then there was an immediate impact from that lock-up,” he said.

McDonald said this may affect the future IPO window, since the psychology of going public is often driven by how recent stocks have performed.

“This does impact the stock price, and could affect one of these start-ups that’s looking to go public and saying ’wow - there’s even more pressure on the stock … I’m going to wait until 2020 or put off an IPO even further,” he said. “It incentivizes a CFO to put it off until next year.”


Direct listings


The lock-up issue is one reason Bill Gurley, partner at venture firm Benchmark, and others have rallied around direct listings. The venture capitalist said on CNBC in September that the IPO process was a “bad joke” for Silicon Valley. Gurley gathered more than 100 CEOs of late-stage private tech companies, along with another 200 or so CFOs, venture capitalists and fund managers for an invitation-only event in San Francisco called “Direct Listings: A Simpler and Superior Alternative to the IPO.”

Mark Goldberg, partner at Index Ventures, said with direct listing there is no lock-up period, “so buyers and sellers can meet on day one of trading without any distortion - it’s much cleaner.”

“The money currently trapped in lock-ups weighs heavily on recent IPOs; even if current investors decide to hold beyond the lockup, the public markets are forced to guess which direction they will go,” Goldberg said. “That uncertainty creates volatility. A direct listing helps a company find its financial equilibrium faster.”


‘Short-term headwind’


Lyft’s lock-up ended on Aug. 8. While shares held up that day, the stock has dropped roughly 40% since the lock-up expiration date.

Tom White, senior research analyst at D.A. Davidson, said Lyft’s weakness was more about general “de-risking” in the market as opposed to the lock-up expiration date.

“I generally think of these expirations as more of a short-term headwind for a newly public company’s shares,” White said. “For Uber, as in Lyft’s case, given how long it was a private company, I suspect some of the early investors are sellers of the stock effectively at any price.”

McDonald echoed that sentiment and said IPO market weakness is more about equity investors shunning risk in search of defensive names, especially as trade war uncertainty drags on. IPOs, for the most part, are squarely in the risk category.

“Every single nook of the market that is risk-oriented is getting nailed right now,” he said. “It’s just an indicator of what the market is going through.”

Newsletter

Related Articles

0:00
0:00
Close
Nearly Half of Job Losses Under Labour Government Affect UK Youth
UK Chancellor Reeves Eyes High-Value Home Levy in Budget to Raise Tens of Billions
UK Urges Poland to Choose Swedish Submarines in Multi-Billion € Defence Bid
US Border Czar Tom Homan Declares UK No Longer a ‘Friend’ Amid Intelligence Rift
UK Announces Reversal of Income Tax Hike Plans Ahead of Budget
Starmer Faces Mounting Turmoil as Leaked Briefings Ignite Leadership Plot Rumours
UK Commentator Sami Hamdi Returns Home After US Visa Revocation and Detention
UK Eyes Denmark-Style Asylum Rules in Major Migration Shift
UK Signals Intelligence Freeze Amid US Maritime Drug-Strike Campaign
TikTok Awards UK & Ireland 2025 Celebrates Top Creators Including Max Klymenko as Creator of the Year
UK Growth Nearly Stalls at 0.1% in Q3 as Cyberattack Halts Car Production
Apple Denied Permission to Appeal UK App Store Ruling, Faces Over £1bn Liability
UK Chooses Wylfa for First Small Modular Reactors, Drawing Sharp U.S. Objection
Starmer Faces Growing Labour Backlash as Briefing Sparks Authority Crisis
Reform UK Withdraws from BBC Documentary Amid Legal Storm Over Trump Speech Edit
UK Prime Minister Attempts to Reassert Authority Amid Internal Labour Leadership Drama
UK Upholds Firm Rules on Stablecoins to Shield Financial System
Brussels Divided as UK-EU Reset Stalls Over Budget Access
Prince Harry’s Remembrance Day Essay Expresses Strong Regret at Leaving Britain
UK Unemployment Hits 5% as Wage Growth Slows, Paving Way for Bank of England Rate Cut
Starmer Warns of Resurgent Racism in UK Politics as He Vows Child-Poverty Reforms
UK Grocery Inflation Slows to 4.7% as Supermarkets Launch Pre-Christmas Promotions
UK Government Backs the BBC amid Editing Scandal and Trump Threat of Legal Action
UK Assessment Mis-Estimated Fallout From Palestine Action Ban, Records Reveal
UK Halts Intelligence Sharing with US Amid Lethal Boat-Strike Concerns
King Charles III Leads Britain in Remembrance Sunday Tribute to War Dead
UK Retail Sales Growth Slows as Households Hold Back Ahead of Black Friday and Budget
Shell Pulls Out of Two UK Floating Wind Projects Amid Renewables Retreat
Viagogo Hit With £15 Million Tax Bill After HMRC Transfer-Pricing Inquiry
Jaguar Land Rover Cyberattack Pinches UK GDP, Bank of England Says
UK and Germany Sound Alarm on Russian-Satellite Threat to Critical Infrastructure
Former Prince Andrew Faces U.S. Congressional Request for Testimony Amid Brexit of Royal Title
BBC Director-General Tim Davie and News CEO Deborah Turness Resign Amid Editing Controversy
Tom Cruise Arrives by Helicopter at UK Scientology Fundraiser Amid Local Protests
Prince Andrew and Sarah Ferguson Face Fresh UK Probes Amid Royal Fallout
Mothers Link Teen Suicides to AI Chatbots in Growing Legal Battle
UK Government to Mirror Denmark’s Tough Immigration Framework in Major Policy Shift
UK Government Turns to Denmark-Style Immigration Reforms to Overhaul Border Rules
UK Chancellor Warned Against Cutting Insulation Funding as Budget Looms
UK Tenant Complaints Hit Record Levels as Rental Sector Faces Mounting Pressure
Apple to Pay Google About One Billion Dollars Annually for Gemini AI to Power Next-Generation Siri
UK Signals Major Shift as Nuclear Arms Race Looms
BBC’s « Celebrity Traitors UK » Finale Breaks Records with 11.1 Million Viewers
UK Spy Case Collapse Highlights Implications for UK-Taiwan Strategic Alignment
On the Road to the Oscars? Meghan Markle to Star in a New Film
A Vote Worth a Trillion Dollars: Elon Musk’s Defining Day
AI Researchers Claim Human-Level General Intelligence Is Already Here
President Donald Trump Challenges Nigeria with Military Options Over Alleged Christian Killings
Nancy Pelosi Finally Announces She Will Not Seek Re-Election, Signalling End of Long Congressional Career
UK Pre-Budget Blues and Rate-Cut Concerns Pile Pressure on Pound
×