Beyond Meat said on Monday that existing investors will be selling 3 million shares in a secondary offering even though the IPO was less than three months ago.
, enabling early investors like Kleiner Perkins and Obvious Ventures to sell some of their stock. CEO Ethan Brown and some other executives and board members are also participating.
By announcing a secondary offering so soon after hitting the public market, Beyond Meat is allowing those investors to work around the lock-up period that forbids insiders from selling for six months after the initial share sale. Under that schedule, shareholders would remain fully locked up until November.
The risk of waiting three more months is that the hype could wear off, even just a bit, and send the stock spiraling downward. After all,is currently worth less than Beyond Meat despite having about 33 times the revenue. While the selling stockholders still own most of their stakes — none are selling more than about 10% — they're at least allowed to take some risk off the table.
"Typically, very early follow-ons occur when the price has risen a lot, increasing the public float at a time when there aren't a lot of shares available to investors," said Jay Ritter, a finance professor at the University of Florida's Warrington College of Business and an IPO expert. "The company and selling shareholders are happy to take advantage of investor optimism, and investors like the increased liquidity.
Venture-backed companies often hold secondary sales, but not so close to the IPO date. Among tech IPOs in recent years, only
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