But GPRO stock is crashing today on news that founders Nick and Jill Woodman have found a way to “cash out” early, despite a lockup period that’s supposed to expire on Dec. 26.
Normally, you can’t sell shares until 180 days after an IPO — so GPRO stock should be locked up in early investors’ hands until just after Christmas. However, GoPro posted a press release today informing investors of plans from its founders to gift just more than 5.8 million shares to their new, namesake Jill + Nicholas Woodman Foundation.
Here are the details on this GPRO stock move, per the release:
“GoPro, Inc. (NASDAQ: GPRO), enabler of some of today’s most immersive and engaging content, today announced that GoPro’s husband and wife founders, Nicholas and Jill Woodman, have provided a personal gift towards establishing a new charitable organization, The Jill + Nicholas Woodman Foundation. J.P. Morgan Securities LLC, the lead book-running managers of the Company’s June 2014 public sale of 20,470,000 shares of Class A common stock, has agreed to release the charitable organization from a lock-up restriction, effective October 3, 2014, with respect to the 5,821,739 shares of the Company’s Class A common stock gifted to it.”
Now, it’s unclear whether the move will result in a big liquidation of GoPro stock sooner than later. If the Woodmans (or the manager of their charitable trust) believe GPRO stock has more upside, they’ll likely hang on to at least some of those shares for a while after the lockup.
A large sale also would be a bad idea because the dilution to existing GPRO shareholders — which include the personal stakes of the Woodmans as well as other GoPro execs — could cause trouble around the office.
But the loophole is interesting nevertheless.
For the record, I am a big bear on GoPro stock. I just posted the arguments for a big move down in GPRO stock, which include valuation risks, challenges to GoPro margins and its future media plans and general sentiment concerns.
But the lockup risk to GPRO stock was a biggie — and the news that founders might be jumping the queue in an effort to cash out is certainly worth watching.
Jeff Reeves is the editor of InvestorPlace.com and the author of The Frugal Investor’s Guide to Finding Great Stocks. As of this writing, he did not hold a position in any of the aforementioned securities. Write him at firstname.lastname@example.org or follow him on Twitter via @JeffReevesIP.