Palantir shares tumbled after a large number of new shares unlocked for trading for the first time since before the initial public offering. Now that the lockup has expired, 80% of Palantir’s shares are open for trading.
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Lockup on Palantir shares was unusual for a direct listing
According to Bloomberg, the lockup on the shares was an unusual condition of a direct listing. It’s common to see lockups following IPOs but not for companies that go public by listing their shares directly on an exchange, which Palantir did on the New York Stock Exchange last year.
Two longtime Palantir investors told Bloomberg they didn’t intend to sell their shares, but billionaire George Soros said he plans to exit the position. According to Bloomberg, the company has gathered a long list of shareholders over its almost 20 years of existence. Today nearly all shareholders can sell as much of their stock as they want for the first time.
Most companies go through a period of volatility when a large number of their shares unlock after a lockup expires. Bloomberg said this could be especially true of Palantir because it was privately held for so long and has been at the center of controversy.
Co-founder Peter Thiel backed Donald Trump’s presidential bid, becoming an outcast in Silicon Valley as a result. Additionally, Palantir’s customers include the military, intelligence agencies and immigration enforcement, which all see complaints of surveillance overreach and public scrutiny.
Soros said in November that it started investing in Palantir in 2012 and held 18.46 million shares. Soros Fund Management said in November that it had sold all the shares it was able to sell and would “continue to sell shares as permitted.” The firm also said it doesn’t approve of the software company’s business practices. It added that it invested in Palantir during a “time when the negative social consequences of big data were less understood.”
On the other hand, Adit Ventures, which reported holding approximately $270 million worth of Palantir shares, told Bloomberg it would sell few if any, shares today. PHX Financial reportedly holds over $10 million worth of the software company and also said it wouldn’t sell many shares. Ark Invest has also expressed support for Palantir.
The company’s stock declined by more than 7% in morning trading.