Should You Buy Shares of Coupang Inc. (NYSE: CPNG) Before The First Lock-Up Agreements Activate? – Mike Swanson (03/16/2021)

Coupang Inc. (NYSE: CPNG) is a company that just did an IPO and whose stock just started to trade on the New York Stock Exchange. The company hasa garnered a lot of interest among American stock traders who are looking for the next new hot stock to buy into, because it is being called the “Amazon of Korea” by some. The stock already has a market cap of over $85 billion US dollars

The company is indeed a giant in Korea as it does delivery of food and goods to people and provides online video streaming. People have seen how well stocks tied to such trends in the United States have done, but there are reasons to be cautious on buying a stock that just began to trade. Without a good price history you cannot tell where real areas of price support or resistance are to know how to effectively trade the stock. Buying then becomes guessing and those that tried to do that right on the open are already down on their trade.

Companies also often IPO as a way for company management and founding shareholders to make money. Indeed this is going to happen with this stock as it announced yesterday that it is going to do an early lock-up period for some of these shares. In a press release from Monday it explained:

Pursuant to the terms of the lock-up agreements, the restricted period will end with respect to all outstanding shares held as of February 26, 2021 by employees of Coupang (excluding officers who are subject to Section 16 of the Securities Exchange Act of 1934, as amended, and their affiliates) as of December 31, 2020 (collectively, the “Early Release Employee Group”), including any shares held by any trust for the direct or indirect benefit of a lock-up party or of an immediate family member of the lock-up party, in each case to the extent received in their capacity as an employee of Coupang. The conditions for this early release were satisfied as of the close of trading on March 15, 2021.

Coupang estimates that approximately 34.0 million shares held by the Early Release Employee Group will become eligible for sale in the public market at the open of trading on March 18, 2021.

Personally, I would wait to see how this new supply of shares influence the stock price before trying to buy it. Right now caution is best when it comes to large technology stocks in general as their has also been a great rotation out of such stocks into more “real world” cyclical stocks in recent weeks, which is likely to only continue. The two big secular trend changes have been key lows made in both interest rates and commodities in 2020, that is now influencing movements in various stock sectors. At this moment it appears that gold is poised to rally from extreme oversold conditions made in the past two weeks.

-Mike



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