Lockup Period
A contractual window after an IPO during which company insiders are barred from selling their shares.
A lockup period restricts founders, employees, and pre-IPO investors from selling shares for a set window after a company goes public — commonly 180 days in a traditional IPO. It exists to prevent a flood of insider selling immediately after listing, which would put heavy downward pressure on the stock price while the market is still establishing where it should trade.
When a lockup expires, a large number of previously restricted shares can become sellable at once, often causing a temporary dip in share price as insiders (some of whom have been waiting years for liquidity) sell a portion of their holdings — a pattern well-known enough that many public market investors watch lockup expiration dates closely.
If you're an employee or founder near a lockup expiration, plan tax and diversification strategy well before the date arrives — waiting until the lockup lifts to start thinking about a sale plan often means reacting under time pressure right as a predictable wave of selling pressure hits the stock.
How long does a typical IPO lockup last?
180 days is the most common standard length, though some companies have negotiated shorter or staggered lockup structures that release shares in tranches rather than all at once.
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