What Palantir's Lock-Up Period Expiration Means For Investors

Palantir Technologies Inc PLTR shares came under pressure Thursday, extending the stock's losses for a sixth straight session.

Lock-Up Expiration Floods Market With Palantir Shares: Data analytics company Palantir went public Sept. 30 through a direct listing, a relatively inexpensive method of going public.

It's facilitated by the bypassing of intermediaries and directly selling to the public. The offering was priced at $7.25 per share.

A direct listing doesn't mandate a lock-up period, unlike an initial public offering. However, Palantir opted to impose a restriction and allowed insiders to cash in on only 20% of their holdings on the day of the listing.

The remaining 80% was not to be freed up for liquidation until after the release of Palantir's fourth-quarter results.

"This will make approximately 1.8 billion shares available for sale, representing roughly 80% of outstanding shares," William Blair analyst Kamil Mielczarek said in a note.

The number appears mammoth when compared to the average three-month trading volume of 74.33 million shares.

Palantir shares, which ended their debut session at $9.50, began a leg up in late October.

Thanks to a steady rally, the stock hit a record high of $45 Jan. 27, a gain of about 375% from the stock's debut. The stock has since then pulled back, with the impending lock-up expiry on the mind of investors.

The downward spiral was also abetted by an uninspiring fourth-quarter print, with some on the sell-side questioning the achievability of the long-term targets provided by the company.

Related Link: Palantir To Debut New Software, Apps At Inaugural Demo Day

Mixed Stance On Palantir From Funds: Soros Fund Management, which was among the earliest investors in Palantir, said following the listing it had sold all the shares it was permitted to sell and will continue to sell.

The fund's 13F filing for the fourth quarter revealed it held 18.458 million shares of Palantir valued at $434.68 million.

On the other hand, others, including Adit Ventures, PHX Financial, and Cathie Wood's Ark Invest, have signaled they will hold Palantir shares, Bloomberg reported.

PLTR Price Action: At last check, Palantir shares were down 7.61% to $25.02.

Related Link: Morgan Stanley Downgrades Palantir, Says Risk/Reward Paradigm Shifts Decidedly Negative

Photo courtesy of Palantir.