What is an IPO lock-up period? Definition, how it works and examples
Why pre-IPO shares cannot be sold on listing day — who signs the lock-up, how long it runs, the early-release triggers, and what tends to happen when it ends.
The short answer
An IPO lock-up period is the stretch after a listing — most often 180 days — during which the company’s insiders and pre-IPO shareholders have agreed with the underwriters not to sell, pledge or hedge their shares, so the people who owned the company before the IPO are the last ones able to sell into it. It is a contract, not a law. No SEC rule sets its length, which is why terms differ from one prospectus to the next — staggered releases, early releases tied to earnings or the share price, waivers granted by the lead bank.
What is a lockup period in stocks, and who signs it?
Before a company goes public, it and its lead underwriter put a lock-up agreement in place so that the shares held by insiders do not reach the market too soon after the offering. The SEC’s description of who is covered is broad: company insiders including employees, their friends and family, and venture capitalists. In practice the signatories are the directors, the executive officers and the larger holders of record; the IPO lock up period meaning, for all of them, is the same — no sale, no pledge, no short sale, no hedge. Holders who never signed are often bound anyway.
How long is the lock-up period after an IPO?
The typical lock up period after IPO is 180 days, and the SEC puts the usual range at 90 to 180 days. Because it is contractual, the number in your company’s prospectus is the only one that applies — the restriction is disclosed under “Underwriting” and “Shares Eligible for Future Sale”, and the SEC requires the terms to be there. Check where the count starts: Airbnb’s agreement, for example, counts its days from the date of the prospectus. A flat 180 days is not the only form.
A worked example: one employee’s shares through the lock-up
An employee holds 40,000 vested shares when her company lists at $30. The lock-up has an early-release clause like the one above: 25% may be sold after the first earnings release if the share has traded at least 33% above the offer price; everything else is free at day 180. The example shows the real risk of the holding period for IPO shares: not that the price falls, but that it can rise and fall while you are unable to act.
The expiration of IPO share lockups: what happens to the price?
The SEC is direct about it: a company’s stock price may drop in anticipation that locked-up shares will be sold when the lock-up ends. The best-known study of the question, Field and Hanka’s 2001 paper “The Expiration of IPO Share Lockups”, examined 1,948 agreements and found little insider selling while lock-ups were in force, then a three-day abnormal return of −1.5% around expiry and a permanent 40% rise in trading volume. Both effects were much larger for venture-backed companies, whose funds sold more aggressively than executives did.
Lock up period for IPO: the rules, as of October 2026
Common mistakes Assuming 180 days Read your prospectus. Earnings-linked and staggered terms can end earlier or later. Thinking leaving the company frees you A former employee is often bound by the market standoff clause in the original grant. Hedging during the lock-up Collars, short sales and swaps on the locked shares are normally prohibited too. Ignoring tax timing RSUs can settle — and be taxed — while the shares are still locked. See RSU taxes before the listing, not after.
The terms this page uses
Lock-up agreement A contract in which a holder agrees with the underwriters not to sell or hedge their shares for a period after the IPO. Market standoff A clause in an equity plan or investor agreement binding the holder in advance to whatever lock-up the underwriters later require. Restricted period The window during which the lock-up applies — fixed in days, or ending on an earnings-linked date. Early release A release of some locked shares before the period ends, by a trigger in the agreement or by the lead bank’s waiver.
What people ask about IPO lock-ups
What is an IPO lockup, in one sentence? It is an agreement in which a company’s insiders and pre-IPO holders promise the underwriters not to sell or hedge their shares for a set period after the listing — most often 180 days. How long is the IPO lock up period? Usually 180 days, within an SEC-stated range of 90 to 180. Some agreements end on an earnings-linked date or release shares in stages, so the only reliable answer is the one in the company’s prospectus. Does the lock-up apply to former employees? Often, yes.
What is an IPO lockup, in one sentence?
It is an agreement in which a company’s insiders and pre-IPO holders promise the underwriters not to sell or hedge their shares for a set period after the listing — most often 180 days.
How long is the IPO lock up period?
Usually 180 days, within an SEC-stated range of 90 to 180. Some agreements end on an earnings-linked date or release shares in stages, so the only reliable answer is the one in the company’s prospectus.
Does the lock-up apply to former employees?
Often, yes. Equity plans commonly contain a market standoff clause, and if yours does, shares or options granted while you worked there are bound by the lock-up even if you left long before the IPO. The plan document says which.
Can a lock-up end early?
Yes, if the agreement contains a release trigger — often tied to earnings and a share-price threshold — or if the lead underwriter grants a waiver. Neither is a right you can demand.
Do share prices fall when lock-ups expire?
On average, a little. Field and Hanka found a −1.5% abnormal return over the three days around expiry, larger for venture-backed companies. The release date and size are public, so much of the effect can arrive before the day itself.
Does a lock-up apply to shares I hold through an SPV?
Yes. The vehicle is the shareholder and is bound like any other holder. After the lock-up it sells or distributes the shares as its documents set out — see how exits work in the help centre.
Where every figure on this page comes from
Figures were last verified on 2 October 2026. Lock-up terms are set offering by offering; the ones quoted are from a single filed prospectus and illustrate a structure, not a market norm. How a vehicle holding pre-IPO shares handles the end of a lock-up is explained in how exits work. The full Airbnb terms are in its final prospectus.