Many technology plays are inherently fickle for investors looking to make a quick buck post-IPO (initial public offering). Shares held by insiders can amount to a large chunk of a given company's stock, offered as rewards for early employees and investors to stay aboard during the early growth years of these firms.
Companies like Uber Technologies, Inc. (NYSE:UBER) face downward pressure when said shares are exempt from a lockup period, and such has been the case with Uber's share price since early November, when a significant chunk of the company's locked up shares became open game. Uber has indicated approximately 76% of the company's shares were held by insiders in its IPO filing, a number which has no doubt decreased in recent months.
The company has reported higher than expected losses and a cash burn which many believe is unsustainable, perpetuating the downward spiral in this company's share price.
At this point, I remain on the sidelines with Uber and believe it is a speculative play for investors, though for those with a long enough time horizon and the stomach for volatility, buying and holding for a decade or more may turn out okay.
As always, a reminder that insider selling is in no way an indication of the direction a stock is expected to move in the near-term, and long-term investors should assess the fundamentals of said company and consult an investment advisor before making any purchases.
Invest wisely, my friends.
