- FIRST LOCK-UP EXPIRATION DOESN'T MATTER: Roughly 8M additional ADS became available for trading from preferred shares (if converted) on Monday. Note the lock-up expiration dates are tied to the date of the last prospectus (not the IPO date) so the lock-up expired Monday (not today). Those shares would only represent ~2% of BABA's current ADS float.
- NEXT LOCK-UP EXPIRATION IS MASSIVE: Roughly 429M ADS will become available on 3/14/2015, which is greater than the current number of ADS floated on the market today (~368M). Note that the overwhelming majority of that lock-up (~316M) is tied to institutional investors other than Yahoo and Softbank. Another 114M is tied to employees/equity compensation plans and independent directors. Naturally we're not expecting this tranche to dump all their shares, but it wouldn't take much to considerably dilute BABA's ADS.
See the links below for our current thoughts on BABA. In summary, we have a bearish long-term fundamental view on the company, but are on the sidelines looking for a better entry point on the short side.
BABA: Model Facing Secular Pressure
12/04/14 09:17 AM EST
BABA: What the Street is Missing
11/26/14 08:03 AM EST
BABA: Leaning Short, But...
10/21/14 07:02 AM EDT
Let us know if you have any questions or would like to discuss in more detail.
Hesham Shaaban, CFA