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I have read three other threads about employee stock purchase plans (I get to buy company stock at a 15% discount) and come to the conclusion that I should sell most of my shares immediately after they are posted to my brokerage account.

My question is, if thousands of employees have the same plan as me and sell the stock on the same day four times a year, will the share price dip? Would it be beneficial, on average, to wait a certain amount of time (days? weeks? months?) before selling?

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You need to also consider any quiet periods in which you would be prohibited from trading in your company stock. – Justin Ohms Jul 16 '11 at 4:27
I think at my company that those periods only apply to directors and higher. I suppose because they know exact financials, etc before they are reported publicly? – Philip Jul 17 '11 at 4:27

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Usually the amount of the ESPP stocks is very small compared to the overall volume of the trading, so it shouldn't matter. But check if for your company it not so (look at the stock history for the previous ESPP dates, and volumes).

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An instant 15% profit sounds good to me, so you can't go wrong selling as soon as you are able. Here are a couple other considerations:

  • Tax implications: When you sell the stock, you have to pay taxes on the profit (including that 15% discount). The tax rate you pay is based on how long you wait to sell it. If you wait a certain amount of time (usually 2 years, but it will depend on your specific tax codes) before you sell, you could be subject to lower tax rates on that profit. See here for a more detailed description. This might only apply if you're in the US.

  • Since you work for the company, you may be privy to a bit more information about how the company is run and how likely it is to grow. As such, if you feel like the company is headed in the right direction, you may want to hold on the the stock for a while.

  • I am generally wary of being significantly invested in the company you work for. If the company goes south, then the stock price will obviously drop, but you'll also be at risk to be laid off. As such you're exposed much more risk than investing in other companies. This is a good argument to sell the stock and take the 15% profit.*

* - I realize your question wasn't really about whether to sell the stock, but more for when, but I felt this was relevant nonetheless.

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