What it is
A lock-up period is a pre-defined timeframe, typically 90 to 180 days after an IPO, during which major shareholders, including founders, executives, and venture capitalists, are prohibited from selling their stock. This agreement, usually part of the underwriting contract, prevents a flood of shares from hitting the market immediately after the IPO, which could depress the stock price and destabilize the market.
The expiration of a lock-up period is often a significant event for a newly public company's stock. Investors closely monitor these dates, anticipating potential selling pressure as a large volume of previously restricted shares becomes eligible for trading. A sudden increase in supply can lead to a temporary drop in the stock price. Retail investors should track these dates to assess potential volatility and price movements for recent IPOs.
Why it matters
Lock-up expirations can introduce significant selling pressure and volatility for newly public stocks. Knowing these dates helps anticipate potential price drops.
Reviewed under editorial standardsUpdated September 26, 2026Not investment advice