What Is an IPO Lock-Up Period?

An IPO lock-up period, my friend, is simply a contractual provision preventing insiders who already have shares — we’re talking founders, employees, early investors — from selling their stock immediately after the company goes public. Normally, this period lasts from 90 to 180 days. The reason? To prevent the market from being flooded with shares, which could depress the stock price. It’s like a dam, you see, holding back a river of shares. So, when the lock-up period expires, these insiders can start selling their shares, and depending on their actions, it can have quite the influence on the stock price. It’s all a game of supply and demand, my dear interlocutor, as it often is in the financial world.

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