Updated from 11:51 a.m. ET
Look out below. The handcuffs are off
Shares of Handspring fell 5.9% on the first day of trading following the expiration of the personal digital assistant manufacturer's lockup period, the 180 days during which company insiders have been restricted from selling stock in one of the year's most successful initial public offerings. Lockup expirations can increase a stock's float, or the number of shares in a given stock that trade freely on the open market.
, if that new supply isn't met with a corresponding increase in demand, the end of a lockup period can have a distinctly negative impact on a stock.
That's especially the case with Handspring, which has yet to turn a profit. The combination of a tiny float and huge demand for handheld device stocks has helped that stock trade at ethereal heights in the months following its IPO. Just 10 million shares, out of a total of more than 126 million outstanding, have been trading up until today. But with the prospect of another 115,253,728 shares available for sale, investors are running scared. Handspring fell $2.81 to $44.75. It's well off its 52-week high of $99.31.
Ah, horrible, horrible freedom.