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Early signs of tech turbulence may have surfaced late last year

April 24, 2014

Corporate partner Dan Winnike spoke to the Silicon Valley Business Journal about Fenwick’s latest survey of technology and life sciences IPOs and what the data may say about drops in share prices after the lockup period ends and insiders can sell their stock.

Fenwick’s report showed an 11 percent drop in the median value of tech stocks post-lockup in the first half of 2013 and a 24 percent drop in the second half. Life sciences companies did not experience a similar drop and ended the year with slightly higher stock prices. 

However, Fenwick’s valuation calculations excluded eight tech companies that went back to the market for follow-on funding before their lockup period expired, which may have made the overall tech stock drop look larger.

"It's pretty rare for companies to do a second offering before their lockup period ends," Winnike said. "The market was pretty receptive and many of them went back for more."

Fenwick has advised on five tech and life sciences IPOs thus far in 2014, and Winnike said a dozen more were in the pipeline. “We are optimistic that the 2014 IPO market can be as strong, if not stronger, than it was last year,” he said.

"Companies generally begin their process several months before going public and there is considerable expense and diversion of management attention in an IPO period," he added. "So they watch things very carefully to try to pick the correct moment to do this."

The full article is available through the Silicon Valley Business Journal website.