12 December Watchlist 👀
Today we are watching…
1. Chewy (#chwy)
And breathe! Investors in this online pet retailer bought in droves yesterday after finally having their nerves put at ease about a ‘lockup period.’ It won’t end any time soon, apparently, and that’s a big deal! During a lockup period, insiders can’t sell their shares. The moment it expires, however, they can do whatever they want! Having long paid its workforce in stock options, Chewy didn’t want employees immediately cashing out at the opening bell of its public debut a few months ago. The sell-off would’ve ruined funding prospects and created a terrible image, so insider money was locked up. Unless Chewy mends the erosion of its stock price, it’s only delaying the inevitable with this announcement. When the expiry date arrives, it could be like a dam bursting. Look to Beyond Meat’s 20% plummet in October for proof, or Uber’s drop last month. Put yourself in the shoes of a middle manager at Chewy with thousands in ever-lowering stock. What would you do?
2. Softbank (#softbnkm)
Meet the most bullish investor on Wall Street, Masayoshi Son! Leading his investment fund into multi-billion-dollar bets with borrowed money, Masa’s divisively bankrolled Silicon Valley with an “information revolution” philosophy. In recent months, however, Softbank’s portfolio has turned into somewhat of a dumpster fire. Firstly, office rental start-up WeWork crumbled, and its initial public offering (IPO) was canceled. Then, his stake in the ride-sharing app Uber fell to record lows. Now, his fintech play is unraveling. Start-up OneConnect just slashed its IPO price 28%, meaning it might need to ask Masa very nicely for some more cash to keep the lights on in the new year. You win some. You lose some. A return to glory for Softbank is still very much in the cards for 2020, but he’ll have to stay patient!