London Daily

Focus on the big picture.
Tuesday, Jun 16, 2026

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
Government Approves Fast-Tracked Broadcast Merger Reshaping UK's Media Landscape
Resignation of Defence Secretary John Healey Triggers Debate Over UK Military Strategy
Britain Intensifies Diplomatic Efforts to Support US-Iran Ceasefire
Bank of England Faces Tough Interest Rate Choices After Economic Contraction
Belfast Sees Second Day of Anti-Migrant Riots as Police Deploy Water Cannons
UK Economy Shrinks in April as Energy Price Shocks Weigh on Growth
UK to Ban Social Media Access for Children Under 16 From 2027
UK Parliament Opens Week of Fast-Tracked Security and Infrastructure Legislation
Northern Ireland Projects £21 Million Boost From Major Cultural and Sporting Events
UK and Japan Sign Technology Security Pact to Strengthen AI and Supply Chain Cooperation
UK Welcomes US-Iran Peace Breakthrough Aimed at Restoring Strait of Hormuz Shipping
British Forces Intercept Russian Shadow Fleet Oil Tanker in English Channel Sanctions Operation
UK to Ban Social Media for Under-16s Under Landmark Online Safety Expansion
Anti-Immigrant Riots Spread Across Belfast, Raising Security Concerns
Ministry of Defence Opens Europe's Largest Drone Testing Facility in Swindon
Kemi Badenoch Calls for Deregulation to Restore City's Global Competitiveness
UK Housing Market Posts Sharpest June Price Decline in Fourteen Years
NHS Waiting Lists Rise to 7.22 Million as Diagnostic Delays Reach New Highs
Makerfield By-Election Raises Prospect of Labour Leadership Challenge
Bank of England Expected to Hold Interest Rates at 3.75% Despite Growing Policy Divisions
Royal Marines Seize Sanctioned Russian Oil Tanker in English Channel
Prime Minister Keir Starmer Set to Ban Social Media and AI Chatbots for Under-16s
United Kingdom Markets Rally After US-Iran Deal Reopens Strait of Hormuz
Defence Secretary John Healey Resigns Over Military Spending Dispute, Triggering Cabinet Crisis
Royal Navy Takes Part in Trooping the Colour for the First Time in 350 Years
Think Tank Warns Labour's European Union Reset Could Carry Significant Economic Costs
UK Semiconductor Centre and Japan's Rapidus Forge Advanced Chip Manufacturing Partnership
UK and Japan Launch Offshore Wind Compact Backed by £9 Billion in Investment
Starmer and Trump Discuss Iran Peace Efforts and Reopening of the Strait of Hormuz
United Kingdom and Japan Sign £18 Billion Investment Partnership Focused on Clean Energy and Advanced Technology
Barclays Moves to Acquire GoHenry in Bid to Expand Youth-Focused Fintech Services
UK Lupus Patients Show Remission in NHS Genetic Therapy Trial
London Clean Air Zones Linked to Fewer Emergency Hospital Admissions for Respiratory Illness
UK World Cup Scheduling Research Suggests Energy Bill Savings From Off-Peak Usage
UK Economic Anxiety Rises Among Young People Over Long-Term Job Prospects
NHS Expands Meningitis B Vaccination Programme for School Leavers and New Students
London Ultra-Low Emission Zone Linked to Drop in Emergency Respiratory Hospital Admissions
Derbyshire Police Officer Investigated Over Alleged Use of AI-Generated Evidence in Case Files
UK Parents Back Proposed Under-16 Social Media Ban as Online Safety Concerns Grow
Four Palestine Action Activists Jailed Over Sabotage Attack on Israeli-Linked Arms Facility
Barclays to Acquire GoHenry in Push to Expand Digital Banking for Children and Teenagers
UK Government Reaffirms Defence Spending Commitment Amid Cabinet Pressure and Political Disputes
Belfast Unrest Prompts Security Review as Paramilitary Activity Comes Under Renewed Scrutiny
SpaceX IPO Pushes Elon Musk to Become World’s First Trillionaire After Record Valuation Surge
United States and Iran Near Landmark Peace Framework as Negotiations Reach Final Stages
UK Competition Watchdog Investigates Ryanair Family Seating Charges
Imperial College Study Links London Emissions Charges to Lower Hospital Admissions
Scottish First Minister Launches US Trade Initiative Ahead of World Cup Match in Boston
Fifteen Million Workers Gain Expanded Sick Pay Rights Under UK Reforms
British Retail Investors Secure Record Participation in SpaceX Share Offering
×