The date insiders can finally dump — and often do.
A lock-up expiry marks the end of a contractual restriction period — typically 90 to 180 days post-IPO — during which company insiders (founders, employees, early investors) are prohibited from selling their shares. Once expired, the float expands materially as restricted stock becomes freely tradeable.
At IPO, underwriters impose a lock-up agreement — typically 90–180 days — preventing insiders from selling shares. This protects early public investors from being immediately diluted by insider exits.
As the expiry date approaches, institutional traders model how many locked shares will hit the market. If insiders hold a large percentage of float, sell pressure is expected and the stock often trades down pre-expiry.
On expiry day, insiders are legally free to sell. Not all do — selling everything signals zero confidence — but even partial exits from large holders can flood supply and crater the price.
Post-lock-up stabilisation can occur if insiders hold and the company shows strong fundamentals. But statistically, many IPO stocks see a dip in the 30-day window around lock-up expiry.
When Uber's lock-up expired in November 2019, roughly 1.6 billion shares became eligible for sale — nearly 3x the existing float. The stock fell over 40% from its IPO price by expiry day as the market priced in that incoming supply well in advance.
Lock-up expiry is one of the most predictable negative catalysts in markets — and still one of the most overlooked by retail investors. Always check the expiry date before buying a recent IPO. If the stock is already up big and insiders are sitting on 10x returns, the odds of a sell-off are high. This isn't illegal — it's just capitalism doing its thing.
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