In some cases, the approaching lockup expiration results in some investors exiting their positions in an attempt to capture gains before the new selling ensues as insiders attempt to profit from their shares. As a result, stock prices might be influenced by the approaching lockup period expiration date. In most cases, the lockup period is public knowledge, so investors know when the lockup period is coming to an end. Unless an accompanying increase in demand meets this new supply, the stock price could potentially fall, at least in the near term. Lockup periods are important for investors to monitor because the supply of stock available in the public market (known as the float) can increase significantly once insiders begin selling. Typically, lockup periods last between 90 and 180 days. Some companies compensate their teams with large stock awards, but they don’t want employees to sell large amounts of stock as soon as the company starts trading, so they implement a “lockup” period to prevent employees and other insiders, people close to the business, from selling their stock when the company goes public. ![]()
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