IPO lockup expirations: what they are and why the calendar matters

September 2, 2026iposeducation

Insiders can't sell for roughly 90 to 180 days after an IPO. When that window opens, supply changes overnight — here's how lockups work and what typically happens.

Every IPO prospectus contains a clause that matters more to the stock's first year than most of the financials: the lockup agreement. Understanding it explains a lot of otherwise-mysterious price action in newly listed stocks.

What a lockup actually is

When a company goes public, only a slice of its shares — often 10–20% — is actually sold in the offering. The rest stays with founders, employees, and pre-IPO investors. The lockup is a contractual promise, made to the underwriting banks, that those insiders will not sell for a set period after the IPO: typically 180 days, sometimes 90, occasionally structured in tiers that release early if the stock trades well.

The stated purpose is orderly markets: without it, the float on day one would compete with a wall of insider supply. The practical effect is that for its first six months, a new listing trades on a small fraction of its real share count.

Why that distorts the early price

A small float cuts both ways:

• Scarcity amplifies demand. If a hot listing has only 15% of shares trading, modest buying pressure moves the price a lot. Part of the classic IPO "pop and run" is just float math.
• Borrow is scarce too. Shorting a fresh IPO is expensive or impossible early on, so skeptics can't fully express their view. Prices can stay elevated longer than the fundamentals justify.
• The clock is public. Everyone can read the S-1 and count 180 days. The expiration date is known to the day, months in advance.

That last point is what makes lockups tradeable information — or at least, watchable information.

What typically happens at expiry

The research consensus, and what we see in the recent cohort on the Recent IPOs page, is not "every stock crashes on lockup day." It is subtler:

1. Pressure often front-runs the date. Because the date is public, sophisticated holders sell ahead of the anticipated supply, and the weakness frequently shows up in the days and weeks before expiry.
2. The size of the reaction tracks the size of the overhang. A listing where insiders hold 85% of shares and the stock has tripled faces a very different expiry than one trading below issue price, where insiders have little incentive to dump.
3. Staggered and early-release lockups blunt the event. Many modern deals release tranches early once price and time conditions are met, spreading the supply out.

The broader pattern new listings follow — run, peak, give a chunk back — is one we measure explicitly across the recent cohort, using medians rather than averages so a single moonshot doesn't distort the model. Where the peak lands and how deep the give-back runs differs sharply by cohort, which is why SPACs and operating companies are modeled separately.

Reading a lockup like an analyst

Before the expiry of any IPO you hold or watch, three questions do most of the work:

• How big is the locked position relative to the float? A 5:1 ratio of locked shares to float is a real overhang; 1:2 is not.
• Are insiders in profit? Compare the current price to the IPO price and to the last private-round valuations. Deeply underwater insiders sell less.
• Has the release already been spread out? Check the prospectus for tiered or price-triggered early releases.

Each card on the Recent IPOs tracker carries the listing's timeline — days since pricing, whether options have started trading, and its full price path since day one — which is most of what you need to place a listing inside its lockup arc. And for companies still on the runway, the IPO pipeline shows what is coming before any clock starts.

Lockup expiries are one of the few genuinely scheduled supply events in equity markets. They are not a free trade — the market knows the date too — but walking into one unaware is an unforced error, and the calendar is public.