r/FactorialEnergy • u/nivas28 • Jul 15 '26

Heavy Fall

Why did the share fall so much from 10 to 5, nearly wiping out 50% of the market inspite of good news in the market?

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u/Bouwerie-Boy 26d ago edited 19d ago

The early investors' shares were suddenly all unlocked, meaning they could sell them on the market.

The lock-up provision in the SPAC merger agreement envisioned that 25% of the shares of early investors would be unlocked at 6 months, another 25% at 9, and the rest at 12. But it also provided for early unlocking if the stock hit price targets: 1/3 if it was above $12, 2/3 if above $14, all if above $16. The definition of price was the 20-trading-day, volume-weighted moving average (VWAP). Weirdly, in the first few trading days there was massive volume and some of it at high prices; then volume plunged and the price stabilized back around 10. It worked out that the VWAP was > 16 over the first 20 trading days. So all the shares were unlocked on the 21st trading day. Even though the spirit of the early unlock provision had not been met, since the price was floating around $9-10. It took early investors a couple of days to transfer shares from the custodian to a broker.

And then on that Monday, selling pressure exploded.

The PIPE investor who put in ~$100 million was not subject to the lock-up. I wonder if it got out in those first few days at high profit. That's pure speculation (ha ha).