Glossary
Lockup Period
The contractual period after an IPO during which insiders are restricted from selling shares.
A lockup period is a contractual restriction — typically signed with the underwriters, not imposed by the SEC — that prevents company insiders, employees, and pre-IPO investors from selling their shares for a defined window after listing. The standard length is 180 days, though shorter and longer arrangements exist.
Lockups exist to manage the supply of shares that hits the market after an IPO. Without one, a sudden flood of insider selling could destabilize the new listing. The expiration is a closely watched event because it can release a meaningful amount of shares: a company that floated 10% of its stock in the IPO might see hundreds of millions more become tradable on lockup expiration day.
Bookrunners can release lockups early, sometimes in tranches tied to the post-IPO share price.