IPO’s LinkedIn and Pandora “lockup” period is set to expire in the next two months, and we will likely see a resurgence of wealth in Silicon Valley, especially in the real estate market. Employees that owned shares prior to the companies going public are subject to a 180 day lockup period from the date of the IPO, prohibiting them from selling shared until the period expires.
LinkedIn’s market cap. is currently at $9 Billion and the current stock price is over $90 a share, double the $45 initial offering price. They employ over 1,500, and the expiry will free up approximately 50 million shares with another 44 million shares in the future. Pandora’s market cap. is over $2.4 Billion.
With social gaming leader Zynga and social giant Facebook likely to go public in 2012, we will see a new breed of millionaires emerging in the Bay Area home buying market. There are 215 companies waiting to go public- the longest list since 2001. Although the recent drop in the stock market and worries in Europe have delayed many IPO’s, the backlog will come to the table as market turbulence settles. Facebook will be the biggest IPO since Google went public in 2004, driving real estate sales in the South Bay and spilling over into desirable second home markets, like Lake Tahoe. 2006 marked the peak for home prices in Tahoe, and with prices off approximately 30% from their highs, luxury properties are relative “bargains” to buyers looking to own a piece of this pristine lakefront and skiing mecca.
This should come as welcome news to Tahoe sellers who saw a decrease of 4% in number of sales through the 3rd quarter of 2011, versus the same period in 2010. With some sellers pulling homes off the market in the winter, there will likely be a smaller inventory for buyers to choose from. This combined with an influx of cash into the hands of new buyers could give sellers the opportunity they’ve been waiting for this winter into 2012.