Are IPO buyers gonna get TOSTed tomorrow?

I’ve seen TOST posted about a few times in trading floor and in an effort to avoid anyone catching a ban hammer to the dome, here is the basic thesis behind why I believe there has been some chatter.

Essentially Toast Inc, a Point of Sale company for restaurants, had their IPO in late September and the lock up periods for certain share holders are ending. According to company disclosures, effective this AM “15% of vested equity held by current and former employees and consultants could be sold beginning at the start of trading on the second trading day after Toast announces its third-quarter results. As such, the company expected that up to 10,692,110 shares would become eligible for sale in the public market when trading opens Nov. 11.” We saw a $3 drop this morning on some fair volume (200K at open).

Now where this gets a bit interesting is that the company also previously noted that “as another condition of the lockup agreements, up to 15% of the vested equity held by executive officers, directors and other holders would eligible for sale beginning at the start of trading on the second day after share-price conditions are met. Toast said that the conditions would be satisfied if Toast’s stock fetches a closing price of at least $50 on Nov. 10.” Closing price on 11/10/21 was $50.01. Poetic. I’m not one for conspiracy theories, but that closing price sure makes me believe there are some people out there ready to cash in their chips tomorrow morning.

Since the price conditions were met, Toast estimates that up to 65,442,460 additional shares would be eligible to be sold at the start of trading Nov. 12th. So 6X the number of shares will be unlocked tomorrow, leading us to believe a healthy price retreat could be seen tomorrow morning.

Not saying this is a guaranteed thing at all. As of writing this TOST is trading around $47.90 which is down 2% today and down roughly 21% in the past week. I think if their is a price drop, it will be short lived as many analysts and industry experts are extremely bullish on this stock. Could make for a nice swing trade though on some EOD puts to sell at open, then switch to long dated calls if you believe the company has promise.

Shout out to @TheMadBeaker and @T_Milly for bringing this up.

Good luck out there folks.