IPO Lockup Period
What is it? The period after an initial public offering when company insiders are prohibited from selling their shares. Lockup periods typically last 180 days, but they can be as short as 120 days and as long as 365 days. Underwriters insist that insiders such as managers, employees, and venture capitalists sign lockup agreements to shore up the stock price right after the IPO. Since insiders usually still own a majority of the shares, the stock price could plummet if a number of insiders decided to dump their shares at the same time for a quick profit. In fact, a stock?s price often tumbles 10% or more in the days after a lockup agreement expires.Added By: Abigail
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