Is IPO Lockup Expiration the Cause of ONI Systems Slide?

There are two common lockup release scenarios: Robert Downey Jr. getting out of jail, and stock shares being released from pre-IPO holding agreements. In both cases, one gets the sense that nothing good can come from it. ONI Systems(ONIS Quote) may be feeling some pain from the latter this week.

The ONI Systems File

Operations

Business: makes optical networking equipment to prevent bottlenecks

1999 Revenue: $3 million

1999 Earnings: -$46.6 million

Stock Snapshot

52-Week Range: $50.06 - 142

Percentage Change from June 1 IPO: -37.1%

Market Cap: $6.8 billion

P/E Multiple: N/A (Price-to-Sales Multiple: 218)

Shares Outstanding: 131.8 million

Source: Baseline

ONI made its initial public offering on June 1, and inside investors were bound to hold all shares until the close of the market Monday. Lockup expirations are typically seen as a trying time for a stock, as insiders may flood the market with previously illiquid shares, spurring a drop in price. Given that ONI, which makes optical-networking equipment, has retreated 37% since its stratospheric debut in June, the expiration could have been cause for more selling. ...