Peloton shares are released early and summon tech lock-up Deja Vu

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(Bloomberg) – A key moment for home fitness provider Peloton Interactive Inc. next week could bring back memories of last year’s publication of newly issued shares by technology companies – measures that unsettled investors and increased volatility for Lyft Inc. and Uber Technologies Inc.

Around 90% of the outstanding Peloton shares will be released next Monday. This opens up the first window for insiders and early investors since the company’s IPO in September. This special lock-up period, similar to Lyft’s, expires shortly before the traditional 180-day lock-up period that most companies adhere to.

Meanwhile, at the last close of trading, the Peloton stocks were around $ 27 below their IPO price of $ 29. Analysts called early blocking a short-term risk for stocks. MKM’s Rohit Kulkarni said in a report released on Friday that unlike Uber and Lyft, almost all blocked stocks and non-vesting stock options “have substantial positive returns” which could lead to downward pressure in the short term.

Lock-ups “caused volatility in other recent tech IPOs” in anticipation of pent-up selling pressure, although stocks tended to pick up in the days after the decline, BofA analyst Justin Post said in a telephone interview.

Raymond James analyst Justin Patterson recalled the volatility of Lyft and Uber related to the expiry of their sentences and said that “this coincided with negative regulatory headlines. And unique to Uber was a former executive who sold out of the market quite aggressively. “In contrast, the founders of Peloton stay with the company.

The date has been postponed because the expiry of the Peloton lock would have decreased during a lock-up period that would keep insiders from selling. This emerges from a filing with the Securities and Exchange Commission on February 5 when the company reported earnings. A high point of the submission was the company’s estimate for outstanding shares – 317 million. This figure includes options that are or will be vested on February 24, and approximately 273 million Class B convertible shares that are approved for sale on the public market.

Analysts using the 280 million shares outstanding mentioned in Peloton’s quarterly report will need to do some math homework before Monday.

Based on JPMorgan’s estimate of approximately 277 million shares unlocked for insiders and early investors, approximately 87% of the estimated 317 million shares outstanding must be released by Peloton. This would include 144 million shares in affiliates and 133 million shares in non-affiliates.

Tiger Global Management and John Foley, Peloton’s Chief Executive Officer, are among the largest affiliates at around 15% and 6.1%, according to JPMorgan. Technology Crossover Ventures (TCV) has 6%. According to JPMorgan, Fidelity, which owns 5% of the issued shares, and Comcast, with 3.3%, are not affiliated companies. Tiger Global and Fidelity declined to comment. TCV turned to the company to answer questions, while Peloton refused to comment.

To contact the reporter about this story: Crystal Kim in New York at [email protected]

To contact the editors responsible for this story: Brad Olesen at [email protected], Scott Schnipper, Cristin Flanagan

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