CNBC: jingdong carefully, will face a big old shareholders selling after lock-up periods

jingdong documents submitted to the securities and exchange, announced the second share issue, the issue of three Beijing east big shareholders will sell the stock, respectively is capital today, hillhouse capital and DST investment company, cash funds reached $500 million. As a result, jingdong Friday after fall in share prices more than 1%.

as a result of the third quarter earnings disappointed Wall Street expected, after the earnings release, jingdong’s share price for days tumbling, fell by 7%. Since since the middle of August, jingdong’s share price has down from highs of $33 to $24, or 27%.

the CNBC financial media, jingdong institutional investors in the stock lock-up period will be lifted, around the December 5 then jingdong may usher in a massive sell-off old shareholders.

the full text is as follows:

a lot of stock will enter the market again, this warning label need to be on those who came to the us stock market.

due to the limited want to keep the stock supply and stock prices stable, some Chinese companies choose a very low proportion of shares in circulation. 12 Chinese company in the IPO, IPO shares outstanding of the total equity of the average ratio is 14.3%, the average ratio is 31% while the IPO.

one of the typical example is the jingdong, the company in an IPO in late may, jingdong choose stocks accounted for just 7.8% of the total equity market circulation, raised $2 billion. In 264 listed companies in the United States, 7 from bottom of the list of the circulation.

the trouble is that jingdong circulation stock will greatly increase very soon. Some of the early investors in the IPO of jingdong sold some stock, but they also have most of the original. Jingdong declined to comment.

these investors are so-called “lock-up” limit, can’t sell stocks in jingdong listed within 180 days, the lock-up period will be at the end of next week. If the company without major incident, a lock-up period will end on December 5.

jingdong six early investors hold 620 million shares of jingdong. They are the tiger global fund, Russian venture capitalists yuri? Milner DST global fund, sequoia fund, capital today, hillhouse capital and capital male cattle. They declined to comment on CNBC.

such large stocks lifting the ban will cause a painful. Twitter shares tumbled 18% on the day in the lock-up periods, the company’s shares tumbling in lock-up periods that day too. Lock-up periods is not totally bad, of course, facebook’s shares rose slightly on the same day as a lock-up periods, but the reality is that facebook’s stock has been a large number of short at that time, in a very low price.

it is difficult to predict which early investors will sell the stock of jingdong, how much will sell, but jingdong many of the early investors have obtained the high returns. In today’s capital, for example, founder xu, said in an interview today on the capital investment in jingdong won the 100 times of return. The jingdong investors to the company’s valuation at about $30 million to $4500, and now the market value of $36 billion.

for such investors, it is hard to imagine they will continue to hold the stock jingdong, they find it difficult to get a higher return. As a Wall Street investment bankers point out, a lot of investors to measure return on investment for a year period, to have such a high gain investors, jingdong stock must continue to achieve amazing rise, in order to keep investors annual earnings.

even some late a lot of investors are also obtained the considerable income, milner DST capital in February 2013, the price of $7.81 per share investment jingdong, and jingdong’s shares are trading at about $25.

considering such a high income, it is hard to imagine that investors will continue to bet on the jingdong listed after the stock. And these investors are basically the risk investment company, they don’t usually long-term holdings in listed company.

if more stock was sold, another reason is that investors fear jingdong: jingdong didn’t have any profit, but also to a large extent, jingdong industry risks: proprietary electrical contractor (such as amazon) can only get low profit margins. Analysts widely expect the jingdong will continue to losses of $154 million in 2015, even excluding interest, tax and amortization cost. If a large number of stock was put into the market, people will find it hard to find any positive indicators to support the stock price.

jingdong’s share price has a rise of 40% in the price, but alibaba than September price rose 69%. Jingdong is backward, but more difficult battle is in the back.

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