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Here's Why Snap's Stock Could Be in for Another Big Plunge on Monday

Just when it seemed that Snap Inc.'s (SNAP) wild post-IPO ride couldn't get any worse, Wall Street is bracing for another big move in the shares beginning on Monday.

That's when the Snapchat parent company's 150-day lockup period expires and up to 400 million shares are eligible flood the market, which is expected to put the stock under pressure (Snap's current float is 188 million shares). Those 400 million shares are primarily owned by early investors and insiders such as CEO Evan Spiegel and CTO Bobby Murphy, as well as venture capital firms Lightspeed Venture Partners and Benchmark Capital, among others. Snap has another lock-up period set to expire at the end of August, when as many as 800 million shares owned by employees, directors and other parties are eligible to be sold.

Lockup periods are a standard part of the initial public offering process, with most ending after 180 days, although they can last anywhere from 90 days to more than a year. Once the lockup expires, company insiders who bought into the stock early (usually at a discount to the IPO price) are allowed to sell their shares. A lockup period exists to prevent a flood of shares from hitting the market right after an IPO, as well as to support the price of a stock, reducing volatility.

While much of Wall Street agrees that the lock-up expiration is a short-term concern, the potential stock move is hardly welcome news given Snap's recent plunges. The stock has fallen nearly 23% over the month of July (drifting below its $17 IPO...


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