Lockup Expiry

The date when contractually restricted company insiders are legally allowed to sell their shares on the open market.

A lockup expiry is the date when contractually mandated selling restrictions lift for company insiders, founders, and early-stage investors following an initial public offering (IPO) or major corporate restructuring. During the lockup period—which typically lasts between 90 and 180 days—these key stakeholders are legally prohibited from selling their shares. This cooling-off period is designed to stabilize the stock price immediately after listing by preventing a sudden flood of supply from overwhelming market demand. Investors monitor lockup expiry dates closely because they represent a significant shift in the supply-and-demand dynamics of a stock. When the lockup ends, a massive volume of previously restricted shares suddenly becomes eligible for sale on the open market. This event does not guarantee that insiders will sell, but the potential for increased supply often creates a temporary overhang on the stock price. How a stock behaves around its lockup expiry can provide valuable clues about market sentiment. If insiders sell heavily and the stock price drops sharply, it may indicate weak confidence in the company's near-term prospects. Conversely, if the stock price remains stable or rises after the expiry, it suggests strong institutional demand capable of absorbing the newly available shares, which is generally viewed as a bullish signal.

Company A goes public with 100 million total shares outstanding, but only 20 million shares are initially floated to the public. The remaining 80 million shares are held by founders and early venture capitalists subject to a 180-day lockup. On day 181, the lockup expires, meaning the supply of shares eligible for trading instantly increases from 20 million to 100 million (a 400% increase in float), creating potential downward pressure on the stock price.