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Comment by dehrmann | Hacker News Reader

This reads like the usual Uber criticism and doesn't touch on the lockup. The market knew the lockup was ending, so it should have been priced in. Dropping when the lockup ends should mean that markets underestimated how many insiders wanted to cash out, and employee sentiment is worse than market sentiment.

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> Dropping when the lockup ends should mean that markets underestimated how many insiders wanted to cash out, and employee sentiment is worse than market sentiment.

Uber's volume is 700% compared to last week. With volume-swings like that, there really isn't much you can do.

Of course there is. You can short, it's pretty profitable.

You can only short if you can find someone willing to lend you shares. Shorts can "run out of shares to borrow" in practice. Similarly, you can buy put-options (or sell call options) on the shares, but only if you can find a counterparty to accept the "other side" (that is, a short-put or a long-call) of your bet.

Run out of counterparties, and it becomes impossible to trade. Reality becomes evident at times like this when volume is way, way, way higher than anybody expects.

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I admit that I don't know what happened today with Uber, but we can't just assume "invisible hand / market is always perfectly efficient". Reality simply doesn't work like that.

I'm not sure what value your comment is adding - look at uber's option chain, there's plenty of volume everywhere: https://www.nasdaq.com/market-activity/stocks/uber/option-ch...

While yours is an economics textbook answer, any trader will tell you, "it doesn't matter until it matters."

Yes. A lot of discussion here seems to be very academic vs how things play out.

No one likes unquantifiable market factors like confidence, which is hard to suss out and can rapidly deteriorate without yet showing up in technicals.

Trader proverb: "Markets can stay irrational longer than you can stay solvent"

I dunno, but I wouldn't read too much about employee sentiment into this.

Say you have $150k in savings and $x million in Uber stock. Any competent financial advisor is going to get you to diversify out of Uber. You'll miss upside, but prevent that $x million from potentially going to zero based on the actions of just one company.

Also... goodbye sf housing market :(

> Also... goodbye sf housing market :(

That ship sailed a while ago, no?

Another 1k millionaires looking to buy a house is horrific.

Is that going to materially change the ability of a non millionare to purchase a house in the bay area? Honest question.

If in effect they are all going to compete with each other an other (mostly IT) millionaires for housing and pay slightly more, it doesn't seem like a real shift.

This. I sell any stocks as soon as I can after vesting (trading window permitting) and then diversify into other holdings. I still have RSU's that have not vested that I get to enjoy any upside on.

> Any competent financial advisor is going to get you to diversify out of Uber

Agreed, but they seem to have no problem suggesting putting 50% of your net worth in a home.

Having been though a company going public, while that advice is correct, the endowment effect is a real thing, and it's shocking how long people hold on.

Agreed, I came to post the same thing.

The lockup period is a known event (nothing to be suprised about). The market already adjusted the stock price to reflect the anticipated insider cash out after the lock up.

Any rise or fall in the price at the specific time the lockup ends is because the reality is different than what the market anticpated.

Volume is extremely important.

The 90-day average volume for Uber is ~10-million shares per day. Lets pretend you knew that Uber was going to drop today (last week). How many shares do you sell short?

That 10-million average is ALL market trades, buying, selling, etc. etc. If 10-million shares were short-sold, it'd take a full day to cover all of those shares (based on average volume). There's only so much trading activity that happens at any given moment in time.

Well, what happened today? Uber is now up to... (check's Yahoo finance...) 95-million volume, and counting.

Huh. Well, I guess you could have sold more shares short last week. But given the 10-million share 90-day average volume, there was basically no way to predict 95-million shares traded before noon come Wednesday.

Surely with a lock up date it was pretty predictable that volume would be some large multiple of it's usual.

Sure. But what multiple do you expect?

If you expected 2x or 3x the volume, you were proven wrong in the 1st hour. Between 9am EST to 10am EST, over 40-million UBER shares traded, representing ~400% of the average daily volume in just 1-hour.

But getting it exactly right isn't the point, is it? You were asking how many should you short, if you think the market hasn't priced the lock out in ,the answer doesn't have to be optimal, it's just more than the usual volume.

What am I missing? For sure you couldn't know it would be 95 mil, but is 20 really that speculative?

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