ExactTarget’s stock price falls as insiders unload shares

ExactTarget Inc.'s stock price fell more than 7 percent Tuesday after company insiders shed more than 7.5 million shares of the Indianapolis-based marketing software firm.

The stock dropped to as low as $21.80 per share during the day before closing at $23.07, a drop of 7.2 percent from Monday's closing price.

The selloff follows the expiration Monday of ExactTarget’s lock-up agreement, a ban that prohibit insiders from selling their shares for a period of time after a company goes public.

Indianapolis-based ExactTarget went public in March at $19 a share, raising $161.5 million. The stock soared to a first-day close of $25.11 and hit a low of $18.53 in early June.

Palo Alto, Calif.-based Technology Crossover Ventures and Boston-based Battery Ventures, two of ExactTarget’s largest stockholders, are responsible for shedding almost three-quarters of the shares unloaded as part of a follow-on offering announced Sept. 11.

Technology Crossover Ventures sold nearly 3.3 million shares, taking its ownership stake in the company down to 17 percent, while Battery Ventures sold more than 2.2 million shares, leaving it with an 11.4-percent ownership stake.

Foster City, Calif.-based Scale Venture Partners unloaded about 900,500 shares, leaving it  with a 4.7-percent stake.

ExactTarget CEO Scott Dorsey sold 300,000 shares, taking his ownership stake from 3.6 percent to 3.1 percent.

The 7.5 million shares unloaded by insiders will be priced in a follow-on public offering at $22.50 each, the company announced Sept. 11.

So-called lock-up agreements ensure insiders and early investors don’t dump their holdings during an IPO. The restriction on stock sales typically lasts up to 180 days. Some experts say tech stocks are especially vulnerable to lock-up expirations because many issue a smaller percentage of their stock during the IPO than other companies. Many tech stocks also have higher valuations than non-tech stocks relative to cash flow and other key measures, critics complain.

“The price of our common stock could decline if there are substantial sales of our common stock” by insiders, ExactTarget said in its registration. “We have a small public float relative to the total number of shares of our common stock that are issued and outstanding.”

Trading of Exact Target’s stock was heavy Tuesday morning, as nearly 2 million shares changed hands. By comparison, volume on Monday reached only 226,300 shares.