Takeaway: First lock-up doesn't matter. The next one (3/2015) is larger than its current float, owned mostly by institutional investors


  1. 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.
  2. 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.

BABA: When the Lock-Up Expiration Matters - BABA   Lock Up Expiration

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

(click here)

BABA: What the Street is Missing

11/26/14 08:03 AM EST

(click here)

BABA: Leaning Short, But...

10/21/14 07:02 AM EDT

(click here)

Let us know if you have any questions or would like to discuss in more detail.  

Hesham Shaaban, CFA