Tomorrow the first traunch of insider stock at Twitter will unlock, allowing non-executive employees to sell a portion of their shares. Nearly 9.9 million shares will be set free on Saturday, worth around $565 million.
The February unlock pales in comparison to the much larger one coming in May, making tomorrow’s sale point an early test for Twitter: A large decline in its share price following the smaller unlock could portend a sharper decline when far more shares become salable.
There is some sentiment in the market that the unlocked shares will cause Twitter to wobble. No insiders sold at the time of the company’s IPO, which ended up working in their favor: The company’s share price has more than doubled since its flotation; employees that might have wished to sell a portion of their shares at IPO as a hedge didn’t get the chance to do so, and thus enjoyed the upside by default.
After a painful correction in share price after its maiden quarterly earnings report indicated that its user growth rate was slowing, Twitter would appreciate share price stability as it passes this first hurdle.
What will employees use the funds for? The Wall Street Journal reports that the unlocked shares and their incurred revenue for employees will be used as a “way to settle income tax expenses from vesting shares.” Seeking Alpha wrote that the sums could also be used to buy Ferraris.
Whatever the case, Twitter employees are about to enjoy the start of their day in the green light.