Lockup expiration: what happens 180 days after an IPO

A lockup period is a contractual restriction in the underwriting agreement that prevents company insiders, employees, and pre-IPO investors from selling their shares for a set window after the IPO. The standard length is 180 days.

Why lockups exist

In the first weeks after an IPO, the public float is typically small — perhaps 10–20% of total shares outstanding. If the remaining 80–90% became tradable on day one, supply could overwhelm demand and depress the price. The lockup gives the new listing time to develop a stable trading pattern.

What expiration looks like

On lockup expiration day, the eligible float — shares insiders are now legally permitted to sell — increases sharply. That does not mean every insider sells, but the available supply changes. Common observable patterns:

• A modest pre-expiration drift down as traders position for the new supply.
• A sometimes-noticeable volume spike on expiration day.
• A meaningful share of insider sales clustered in the following days, often executed via 10b5-1 plans set up in advance.

Early releases and staged lockups

Lockups can be released early at the discretion of the lead-left bookrunner. Some recent IPOs have used staged lockups that tier expiration based on the post-IPO share price. Always check the prospectus underwriting section for the specifics.

Examples

See Reddit (180-day standard lockup, expired in September 2024) and Rubrik for recent precedents.