What is a lock-up period?
A lock-up period is a contractual time period — typically 90 to 365 days — after an IPO during which insiders (founders, early investors, employees) cannot sell their shares.
Why do lock-ups exist?
The lock-up period protects the market by preventing a sudden supply of large share blocks immediately after an IPO, which could significantly push down the price.
What happens when the lock-up expires?
When the lock-up period ends, insiders can begin selling. This often leads to increased trading volume and sometimes short-term downward price pressure.