Bandwidth Could March Lower When Lockup Expires

The adjusted 180-day lockup period for Bandwidth Inc. (BAND) ends on May 21, 2018. When this six-month period ends, the company’s pre-IPO shareholders will have the opportunity to sell 13.5 million currently restricted shares. The potential for a sudden increase in the volume of shares traded on the secondary market could negatively impact the stock price of BAND. Less than 4.1 million shares of BAND are currently trading.

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(Source: S-1/A)

Currently, BAND trades in the $36 to $37 range. BAND had a first day return of 6% and has had a return from IPO of 78%.

Note: While the 180-day IPO lockup expiration for BAND was scheduled for May 9, 2018, this date is usually delayed when the company reports earnings within close proximity to the IPO lockup expiration. BAND is scheduled to report Q1 results on May 2, 2018.

In our seven-year study of IPO lockup expirations, we have found this period of delay to be 17 calendar days from the date of earnings, making the adjusted lockup expiration for BAND 5/21/18 (May 19th falls on a Saturday).

Business Overview: Platform-as-a-Service Provider

Bandwidth offers a software-powered, cloud-based communications platform-as-a-Service within the United States. The company has two divisions: CPaaS and Other. Bandwidth markets its services as giving companies the ability to create, operate, and scale across text or voice communication services over connected or mobile devices. The company also offers data resale, SIP trunking, and hosted VOIP services.

(Source: S-1/A)

The company’s solutions include an array of software application programming interfaces (APIs) for text and voice functions. Its Internet protocol (IP) voice network competes with the largest such networks in the United States.

In its SEC filings, Bandwidth noted it is the only CPaaS provider with its own countrywide IP voice network, which is tailored specifically for its platform, and the company believes these proprietary applications comprise a significant competitive edge within the industry. Bandwidth’s clients include ZipRecruiter, Rover, Kipsu, GoDaddy, Dialpad, Skype for Business, Microsoft Office 365, and Google Voice.

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Disclosure: I am/we are short BAND.

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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