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Comment by streetcat1 | Hacker News Reader

The post lockup sale was already "priced" into the share price a month ago (or even before). The market react only to NEW information.

In general, it is impossible to know what is priced in or not.

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By your logic, it should have been priced in at IPO, since we knew back then that it would happen.

However, note that back then we also didn't know what else was going to happen. We didn't know if earnings would go up or down, or a lawsuit would emerge etc.

After earnings (a few days ago), we had a "purer" expression of the effect of the lockup expiry.

In other words, we had the information but there was also a lot of noise at IPO (or a month ago etc).

You are correct. Everything is priced in, alas, with probability of occurrence. If you look at option pricing the probablity is part of Black & Scholes formula.

Also, the market did not know about earning,this is a surprise information (or it should be).

I would also argue that the market priced in new information within milliseconds.

All timescales happen simultaneously on the market. So there is a slice of the market that’s priced how you say: IPO plus many years. There’s another slice that’s priced on the day’s expectations, another slice on the quarter, etc.

How big each slice is varies per company. But OP is correct that for all slices that contain yesterday, yesterday is priced in. Which includes all slices that were in the order book yesterday.

Some people did get out between IPO and yesterday, and they would not have priced yesterday at IPO.

All timescales do happen, however, the actual share price (the last trade) is decided by the very very short term order book, which is very sensitive to new information.

I will just point out what I see as a contradiction in these statements:

If getting out of the stock after the IPO and before the lockup expiry allows you to "escape" the effect of the lockup expiry, then you are implicitly saying that the expiry was not priced in.

I don't know what it means for a "slice" of the market to be priced a certain way. Uber has a clearing price which reflects all the opinions at any point in time. What is a slice?

Basically, sort all shareholders by planned sale date. Then you can slice them into “bins”. Let’s say we want nine $5B bins. They will each have a median planned sale date.

Made up example numbers:

$0-$5B of market cap: plan to sell within 24h

$5-$10B: plan to sell within 30d

$10-$15B: plan to sell at the end of the quarter

etc...

For any given future event, it will only be implicated for some of those slices. So the cost of an event will only affect that part of today’s order book.

I reckon that's generally true, but I'm trying to think through if it applies when composition of "the market" changes, e.g. when people that couldn't participate before (in lockup period) can participate now.

Is it still the case?

No, the market prices are not decided by a group of uber employees selling or buying.

In general, trading is done between hundreds of hedge funds, each with at least 10B in assets. Uber employee trading is meaningless.

What does the assets of the fund have to do with anything? If a bunch of new sellers are (literally) unleashed, what matters is how much depth there is on the bid side of the order book.

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