Domo Could Dip When IPO Lockup Expires

The 180-day lockup period for Domo, Inc. (DOMO) ends on December 26, 2018. When this period ends, the company’s pre-IPO shareholders and insiders will be able to sell nearly 16 million shares of currently-restricted stock.

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With just 9.2 million shares of DOMO trading pursuant to the IPO, any significant sales of these restricted shares could flood the secondary marketplace and result in a sharp, short-term downturn in share price when the lockup expires. Aggressive, risk-tolerant investors should consider shorting shares of DOMO ahead of the IPO lockup expiration on December 26th.

Trading in DOMO has been mixed during this six-month period, although the share price is still just above its IPO price. The stock was priced at $21 and closed on its first day of trading at $27.30 for an increase of 30%. The shares dropped to $16.06 on July 30, then climbed back to $23.51 on August 31. DOMO has a return from IPO of -4.7%.

Business Overview: Provider of Business Operations Platform

Domo provides a cloud-based platform that connects senior executives to frontline employees in real-time. The system is designed to provide insights into the systems, data, and people of a company through smartphones. The platform also delivers a Programmatic Revenue Solution that provides data from sell-side platforms and ad servers for deeper insights.

Domo leverages artificial intelligence, alerts and indices, correlations, and machine learning to provide real-time data that is accessible from any device. Domo markets its products to CEOs as a way to manage an entire organization from a smartphone. In its SEC filing, Domo notes that one Fortune 50 CEO logs into his Domo account up to 10 times per day.

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Because the platform is cloud-based, it can process massive volumes of data and still maintain high performance objectives. On average, Domo processes between 100 to 200 trillion rows of queries while sustaining a subsecond query response time.

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Disclosure: I am/we are short DOMO.

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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