What is a lock-up expiration? Definition, how it works and examples
The day the restriction lifts — how the expiry date is set, what tends to happen to supply and price around it, and how a pre-IPO holder plans for it.
The short answer
A lock-up period expiration is the day the contractual ban on selling pre-IPO shares ends — most often about 180 days after the listing, on the exact date the prospectus sets — and insiders, employees and early investors may sell for the first time, subject to the securities-law limits that still apply to some of them. For anyone holding equity from before the IPO, it is the first real liquidity date, and it is the same date for almost everyone. Supply can multiply overnight, the market knows exactly when, and the price tends to move before and around it.
What is IPO lockup expiration, and how is the expiration date set?
What does lock-up expiration mean in practice? It is the end of the restricted period in the agreement each holder signed with the underwriters. No regulation fixes the date. The agreement does — often a number of days counted from the date of the final prospectus rather than the first trade, sometimes a date tied to an earnings release, sometimes staggered for different groups. The SEC describes the usual length as 180 days. Early releases — tranches on price triggers, earnings-linked ends, waivers by the lead bank — move the date for some holders, and they are explained on IPO lock-up.
What happens to the stock at lock-up expiration?
The SEC warns that when lock-ups expire, “the share price may decline significantly if a large number of shares become available for sale all at once”. The best-known evidence is Field and Hanka’s 2001 study of 1,948 lock-ups: an average three-day abnormal return of −1.5% around expiry, and trading volume that rose 40% and stayed there. Both effects were larger where venture funds held the shares. The effect is modest on average because the release is no secret. The prospectus states the size of the overhang and the date; the market can price it in advance.
Who can sell at expiry — and who is still limited?
The lock-up is a contract. When it ends, securities law still applies, and it treats holders differently depending on whether they are an affiliate — a person who controls, or is under common control with, the company: in practice directors, executive officers and large holders. Employees with plan shares Shares from options or RSUs issued under Rule 701 can be resold by non-affiliates 90 days after the company becomes reporting, without Rule 144’s holding period or current-information condition. By day 181 that condition has long been met.
Post-IPO lock-up expiration and 10b5-1 plans
Insiders who want to sell soon after expiry face a second clock. A Rule 10b5-1 plan cannot make its first trade until a cooling-off period has passed: for directors and officers, the later of 90 days after adoption or two business days after the next 10-Q or 10-K, capped at 120 days; for everyone else, 30 days. A plan adopted on day 180 for a director starts selling three to four months later. So the usual sequence is to adopt the plan during the lock-up, in an open trading window, so the cooling-off runs out close to the expiry.
A holder’s checklist for the lock-up expiration date
Confirm the date From the 424B4 and your own agreement — and whether any early-release tranche applies to you. Confirm your status Affiliate or not decides whether Rule 144’s volume, manner-of-sale and Form 144 conditions apply. Check the window Your insider trading policy may close trading around earnings, including on the expiry day. Decide on a plan early If you are a director or officer, a 10b5-1 plan adopted months ahead is what makes an early sale possible. Know your cost basis and tax Shares from RSUs were taxed at settlement; a sale creates a separate gain or loss.
Lock-up expiration: the rules, as of October 2026
Common mistakes Counting 180 days from the first trade Many agreements count from the prospectus date instead. Read yours. Assuming expiry means unlimited selling Affiliates stay under Rule 144’s volume and notice conditions. Forgetting the blackout window An expiry inside a closed window is not a sale date for insiders. Adopting a plan on the day The cooling-off pushes the first trade months out. Anchoring on the listing-day price The price that matters is the one at expiry, after the market has priced the overhang.
The terms this page uses
Lock-up expiration The end of the restricted period in a lock-up agreement, after which the holder may sell. Lock-up A holder’s agreement with the underwriters not to sell or hedge shares for a period after the IPO. Market overhang Shares outstanding but not yet tradable. Their number and release dates are in the prospectus. Affiliate A person who controls, or is under common control with, the issuer — typically directors, officers and large holders. Rule 144 The SEC safe harbour for reselling restricted and affiliates’ shares without registration.
What people ask about lock-up expiration
What is a lock-up expiration? It is the date the agreement that stopped pre-IPO holders from selling after a listing comes to an end. From then on, holders may sell, subject to securities-law limits such as Rule 144 for affiliates and the company’s trading windows. What does lock-up expiration mean for the share price? On average, a small fall. Field and Hanka found a −1.5% abnormal return over the three days around expiry, with a permanent 40% rise in volume. Because the date and size are in the prospectus, much of the effect can come before the day.
What is a lock-up expiration?
It is the date the agreement that stopped pre-IPO holders from selling after a listing comes to an end. From then on, holders may sell, subject to securities-law limits such as Rule 144 for affiliates and the company’s trading windows.
What does lock-up expiration mean for the share price?
On average, a small fall. Field and Hanka found a −1.5% abnormal return over the three days around expiry, with a permanent 40% rise in volume. Because the date and size are in the prospectus, much of the effect can come before the day.
Can I sell on the first day after the lock-up ends?
If you are not an affiliate and your company’s trading window is open, generally yes. Directors, officers and large holders are still limited by Rule 144’s volume and notice conditions and by the cooling-off of any 10b5-1 plan.
Can the lock-up end earlier than the date in the prospectus?
Yes, through release triggers in the agreement or a waiver by the lead bank. FINRA requires the release to be announced through a major news service at least two business days before it takes effect.
What happens to shares I hold through an SPV at lock-up expiration?
The vehicle is released like any other holder. It then sells the shares or distributes them to its investors, on the terms its documents set out — not necessarily on the expiry day.
Where every figure on this page comes from
Rules were last verified on 2 October 2026 and are cited for the United States. The price and volume figures are from Field and Hanka (2001), the same study used on the IPO lock-up page. Lock-up terms are set offering by offering; the prospectus that governs your shares is the one to read.