Medallia Could Falter When Lockup Expires

Early Market Performance

The underwriters for Medallia priced its IPO at $21 above its expected price range of $16 to $18 per share. MDLA has a first day return of 76.4%. The stock has had a mixed performance since then, reaching a high of $43 on July 26, and declining to a low of $24.24 on October 22. MDLA currently has a return from IPO of 46.2%.

Conclusion

When the IPO lockup for MDLA expires on January 15th, pre-IPO shareholders and company insiders will be able to cash in on their gains from IPO by selling more than 107 million shares of currently-restricted stock. If just some of these shareholders make significant sales, these currently-restricted shares could flood the secondary market for MDLA and cause a sharp, short-term downturn in share price.

Aggressive, risk tolerant investors should consider shorting shares ahead of the January 15th IPO lockup expiration. Interested investors should cover short positions during the January 16th and January 17th trading sessions.

Interested in learning more about IPO Lockup investment opportunities? Check out our subscription service, IPO Insights. We update subscribers with actionable investment opportunities that follow the debut of select companies on U.S. exchanges.

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Disclosure: I am short MDLA. 

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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