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Higher One Lock-Up Period

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December 07, 2010 – Comments (2)

Hey Fools,

So I found something pretty interesting in Higher One's 10Q. I meant to share earlier, but got busy with other stuff. Ultimately I gotta say I am pretty interested in this stock. But it has run up considerably since I first started researching it back in September from $15 to almost $22 today. As it is a new IPO, I have been reluctant to pull the trigger yet just because I want to learn more about the company and I feel like some of the enthusiasm will wear off at some point and a better price will come along. But here is what I wanted to share from the 10Q (bold emphasis mine):

"The market price of our common stock could decline as a result of sales of a large number of shares in the market after the offering or the perception that these sales could occur. These sales, or the possibility that these sales may occur, also might make it more difficult for us or you to sell our equity or equity-related securities in the future. If our existing stockholders sell, or indicate an intention to sell, substantial amounts of our common stock in the public market after the 180-day contractual lock-up and other legal restrictions on resale discussed in our prospectus lapse, the trading price of our common stock could decline.

Upon completion of our IPO, we had outstanding 55,639,587 shares of common stock. The shares of common stock offered in the IPO were freely tradable without restriction under the Securities Act of 1933, as amended, or the Securities Act, except for any shares of our common stock that may be held or acquired by our directors, executive officers and other affiliates, as that term is defined in the Securities Act, which will be restricted securities under the Securities Act. Restricted securities may not be sold in the public market unless the sale is registered under the Securities Act or an exemption from registration is available. Goldman, Sachs & Co. may, in its sole discretion, permit our officers, directors, employees and current stockholders who are subject to the 180-day contractual lock-up to sell shares prior to the expiration of the lock-up agreements.

After the lock-up agreements pertaining to this offering expire on December 14, 2010 or earlier by waiver by Goldman, Sachs & Co., a significant amount of additional shares will be eligible for sale in the public market, subject to prior registration or qualification for an exemption from registration, including, in the case of shares held by affiliates, compliance with sale volume restrictions and other securities laws. If these additional shares are sold, or if it is perceived that they will be sold, in the public market, the trading price of our common stock could decline."


OK, so I have a theory that we may just see some selling on or shortly after this lock-up period expires on December 14th. Why? Well take into consideration that while there are 55.6 million shares outstanding, the float is only 38.9% which is only about 21.62 million shares that trade hands today. It also wouldn't surprise me to see some of these holders wanting to take advantage of some gains while they can. The share price has really taken off, that is for sure.

Again, it's only a theory. I could be totally wrong, but I am going to be interested to see regardless. We may see some pressure on the price which would certainly pique my interest that much more.

Fool on!

Jason (no position)

2 Comments – Post Your Own

#1) On December 07, 2010 at 11:19 PM, MegaEurope (< 20) wrote:

Ultimately I gotta say I am pretty interested in this stock.

Just glancing at it, I'm pretty interested in shorting it!

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#2) On December 08, 2010 at 6:34 PM, jingxin wrote:

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