Sell Coupa Software Ahead Of Lock-Up Expiration

Overview of the Lock-Up Event

The lock-up period restricts major pre-IPO shareholders, such as venture capitalists, employees, managers, owners, and company founders from selling shares.

These restrictions typically last for 180 days and are put in place to maintain a fair and stable market for the new offering. Once restrictions are lifted, these shareholders (who typically own a large percentage of the total shares outstanding) can finally sell.

This increase in shares on the public market, in turn, often leads to a temporary decline in the stock price.

The 180-day lock-up period on Coupa Software (COUP) will expire on April 4, 2017.

Major pre-IPO shareholders hold an aggregate of 40.7M, which represents 84.6% of the total shares outstanding.

(Source: S-1/A)

Pre-IPO shareholders include seven outside investment firms and 11 executive officers and directors.

(Source: S-1/A)

We anticipate a price drop in the two weeks surrounding the lock-up period, which is in line with what we have seen around past lock-up period expirations. We have seen that negative returns around lock-up expirations are often largest for tech companies and when outside investors hold a large percentage of shares. Coupa Software meets both of these criteria.

Business Overview

Coupa Software Incorporated provides a cloud-based spend management platform to enterprises. Through its platform, companies are able to connect with suppliers globally and have greater visibility into and control over how money is spent throughout the company. Its platform offers procurement, invoicing, and expense management modules as well as supporting modules including: sourcing, analytics, contract management, supplier management, inventory management, and storefront. At the time of its IPO, Coupa Software had over 460 organizations and 2 million suppliers from around the world on its platform.

We previously covered COUP here and here.