FireEye Lock-Up Expiration Not Twitter Round Two

Twitter, $TWTR, round two? That was a question for FireEye, $FEYE, investors Tuesday ahead of the expiration of sales restrictions on millions of insider shares. And on StockTwits.com a majority said “no.”

About 68% of FireEye’s outstanding shares will become available for trading Wednesday. Investors in the security company have long braced for a scenario in which insiders, frustrated with FireEye’s near 70% decline from March all-time-highs, will shed shares.

$FEYE Almost 74 mil shares eligible tomorrow are from the initial IPO from Sep 2013, initially priced at $13. Investor base were probably $5

— Mike (@scottsdalem) May. 20 at 05:30 PM


$FEYE For employee allocated stocks, it were given to them at less than $1 /share.

— Mike (@scottsdalem) May. 20 at 05:31 PM


$FEYE So either investor or employee, would like to lock profit at $30 before it tanks below $14, its intrinsic value. I rest my case.

— Mike (@scottsdalem) May. 20 at 05:33 PM

However, on Tuesday, many investors bet that the stock would go up as new investors, encouraged by a lack of insider selling, bought in and short sellers covered rather than risk more losses. Short interest in the stock is 10.31% of float, according to shortsqueeze.com.

$FEYE Today was a test by the MM they are going to squeeeeze the life out of the short sellers tomorrow….mark my words.

— brad smit (@Bsmit) May. 20 at 04:56 PM

Sentiment on FireEye remained majority bullish Tuesday with 55% of the StockTwits’ crowd calling for gains, according to site analytics. Bullish sentiment actually increased nearly 6% Tuesday ahead of the lock-up expiry.

$FEYE 70% of the float will be unlocked tomorrow…Seem like lots of heroes are here holding it up. Very brave.

— Lyndon Joseph (@ardeljoseph) May. 20 at 04:00 PM

One reason for the confidence in FireEye insiders holding shares was a bullish note from Nomura. Analyst Rick Sherlund said that FireEye is a best-in-breed security company that will pay off for investors with a longer time horizon who are willing to deal with the ups and downs of the stock as the company invests in its business. Sherlund maintained a buy rating on the stock and $55 target.

FireEye shares rose nearly 5% today and closed up yesterday. However, they declined 0.73% in after-hours trading.

$FEYE here comes the stampede out the exit

— Jason Yi (@Jason100) May. 20 at 03:40 PM

Some investors on StockTwits pointed out that Twitter shares also rose leading up to expiry before tanking 18% after lock-up expired.

$FEYE gap fill technical setup is the perfect bull trap before lockup crashes this one 10% or more…

— bnm (@bnm123z) May. 20 at 02:40 PM

And investors doubted Nomura’s objectivity. Some said that the Nomura analyst might be drinking the FireEye Kool-Aid given that his firm was one of the underwriters of FireEye’s IPO offering and would have had many people exposed to the marketing spiel.

$FEYE Nomura: hey guys, we're the underwriters, so we should probably make a last ditch effort to upgrade this so we get more bagholders

— Brian (@ballsohardstreet) May. 20 at 05:37 PM

But others argued that the impact of the lock-up expiration was already priced into FireEye shares. The stock now has a $4 billion market cap—a far cry from the $13 billion it once boasted.

$FEYE — at one point this thing had a market cap of $13 billion on quarterly revenue of $73 million. My goodness.

— stefan cheplick (@scheplick) May. 20 at 03:45 PM

FireEye expects to bring in between $405 million and $415 million in revenue this year with gross margins in the range of 70% to 73%, according to its latest quarterly report.


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