HeadHunter Could Be Impacted By Lockup Expiration

When the lockup period ends for HeadHunter Group (HHR) on November 5th, the company's pre-IPO shareholders and company insiders will be able to sell more than 31 million shares of currently restricted shares. This number dwarfs the 18.75 million shares offered in the IPO.

(Click on image to enlarge)

(Source: F-1/A)

Significant sales of currently-restricted stock could flood the secondary market and send shares sharply lower in the short term when the lockup expires. Aggressive, risk-tolerant investors should consider shorting shares of HHR ahead of the IPO lockup expiration on November 5th.

Currently, HHR trades in the $17 to $18 range and has a return from IPO of 29.3%.

Business Overview: Executive Recruitment Company Based in Moscow, Russia

HeadHunter Group LLC operates an online platform that provides recruitment services to job seekers and employers. Recruiters and employers have paid access to the platform's curriculum vitae (CV) database, which contains resumes from job seekers. The online platform offers a job postings function as well as value-added services for both employers and job seekers.

(Source: Company Website)

The company notes in its SEC filings that 86% of the platform's traffic was free as of November 2018, and its site is the third most visited employment website worldwide as of January 2019. Their CV database contained 36.2 million CVs as of December 2018, and the company acquired Job.ru in January 2018. In December 2018, the platform hosted a daily average of 559,000 job postings, which is a significant increase from 344,000 job postings in 2016. It had 20 million unique visitors per month in 2018, which is an increase from 16.7 million unique visitors per month in 2016. HeadHunter had 253,000 paying customers at the end of December 2018.

HeadHunter Group has mobile applications as well to access the mobile marketplace. Their apps have been downloaded approximately 15.3 million times through December 2018. The company notes that the majority of the website's traffic comes from the mobile apps.

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Disclosure: I am/we are short HHR.

Disclaimer: I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any ...

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