Xanadu stock faces test as lockup set to lift for most investors

Xanadu stock faces test as lockup set to lift for most investors SEAN SILCOFF TECHNOLOGY REPORTER PUBLISHED 18 MINUTES AGO Open this photo in gallery: Christian Weedbrook, founder and CEO of Xanadu, said that the end of the lockup will make it easier for large institutions to invest. EDUARDO LIMA/THE CANADIAN PRESS COMMENTS SHARE SAVE FOR LATER Listen to this article Learn more about audio Log in or create a free account to listen to this article. Xanadu Quantum Technologies Ltd. XNDU-T -2.89% decrease is about to face one of its biggest tests in its brief, rocky life as a public company. On Sept. 22, a lockup lifts for holders of the vast majority of the quantum computing company’s stock, six months after it went public by merging with a Nasdaq-listed special purpose acquisition company. That means early shareholders including angel investors, venture capitalists, pension funds and banks will be free to sell for the first time. The question is, how many will? The stock quadrupled in value in its first few weeks and crashed just as quickly. It has continued to tail off, and closed Friday at US$7.42 a share. Xanadu founder and chief executive Christian Weedbrook told The Globe and Mail that he’s “really excited” about the lockup lifting. He said the 10-year-old company’s small, freely tradeable float – just 13 million of its 300 million shares up to now – meant that the stock was vulnerable to “crazy” price swings. Indeed, it moved by 10 per cent or more 13 of the first 26 trading days. “The way to get around that is have more shares available,” said Mr. Weedbrook, adding that the end of the lockup will make it easier for large institutions to invest. “I don’t know where the stock will be on the 22nd, but long term, this is really important for Xanadu.” XANADU QUANTUM TECHNOLOGIES CL B 7.42-4.08 (-35.48%) PAST SIX MONTHS MARCH 27 11.50 SEPT. 18 7.42 SOURCE: BARCHART CIBC Capital Markets analyst Todd Coupland, who has a US$22 stock price target, said in a Sept. 1 note that Xanadu is entering a period in which it could hit several “technical de-risking” milestones. He advised investors to “use weakness around the Sept. 22 lockup” to buy. The stock faces “substantial upside” if Xanadu can demonstrate technical progress, while delays in hitting milestones or advancing to commercialization “remain the key downside risks.” Xanadu “should be judged less on near-term monetization and more on whether it converts capital into measurable and…