As of tomorrow, the lockup on shares of Twilio Inc (NYSE:TWLO) expires. While most investors would think this could trigger a ton of selling, they are wrong. At the current price, almost no insiders will be enticed to sell shares. The stock is trading below $29, a far cry from its $70 price of just months ago. Believe it or not, the big drop on this stock is not unusual coming into a lockup expiration. In fact, it is common. And history shows us that while every investor thinks there will be tons of selling, it is actually the opposite.
Once the lockup expiration passes and catastrophe does not occur, investors usually buy heavily and more importantly, cover shorts. This tells me to buy Twilio Inc tomorrow on the expiration fear. With any luck, it will reach my entry price of a stock chart gap fill at $27.35.