IPO Lockup Periods Explained: Why Insiders Can't Sell New Stock Right Away
What an IPO lockup is, why underwriters require one, and where to read the exact terms in a company's SEC filing.
Written with AI assistance; every figure is checked against our calculators and primary sources, and reviewed by Ethan Ginsberg before publishing.
The bottom line
Most IPO lockups bar insiders from selling for about 90 to 180 days after the stock starts trading.
An IPO lockup period is a contract clause that blocks company insiders, employees, and pre-IPO investors from selling their shares for a set window after a stock starts trading, commonly 90 to 180 days. The terms are spelled out in the company's SEC prospectus, and they vary from deal to deal.
SpaceX priced its IPO at $135 a share on June 11, 2026, and opened for trading on Nasdaq as SPCX on June 12, 2026. Its exact lockup terms live in that filing.
What is an IPO lockup period?
A lockup (sometimes "lock-up") is a legally binding agreement between a company's existing shareholders and the banks running the offering. The underwriters are the investment banks that price and sell the new shares. During the lockup, the people who already owned stock before the IPO agree not to sell, transfer, or hedge their holdings.
"Insiders" here means founders, executives, board members, employees with vested equity, and early venture investors. They typically hold the largest blocks of stock, and the lockup keeps those blocks off the market for a fixed stretch after the first trade.
Why do underwriters require a lockup?
A lockup limits how many shares can hit the market in the first months of trading. When a stock first lists, only a portion of total shares is available to buy and sell. That portion is called the float, and the lockup keeps the restricted shares out of it until expiration.
Underwriters write lockups into the deal because a flood of insider selling on day one would dump a large amount of supply against still-forming demand. Staggering when shares become sellable spreads that supply over time. The SEC's investor education site, Investor.gov, explains the basic IPO structure and the role of underwriters in plain terms.
How long does a lockup last?
There is no single legal number. Lengths vary by deal and are set in the offering documents. Common ranges look like this:
| Window | Typical length |
|---|---|
| Standard lockup | ~90–180 days after listing |
| Shorter staged release | Some shares freed in tranches |
| Early-release triggers | Sometimes tied to price or time conditions |
These are conventions, not rules. Some deals run shorter, some longer, and some release shares in stages or allow partial early sales when certain conditions are met. The only authoritative figure for any specific company is the one written in its filing.
Where do you find the actual lockup terms?
Read the prospectus on EDGAR, the SEC's free public filing database at sec.gov. EDGAR Full-Text Search pulls up a company's registration statement (Form S-1) and its final prospectus (Form 424B), the document filed after pricing.
Inside that prospectus, two sections matter most:
- "Shares Eligible for Future Sale" lists how many shares are restricted, when they become sellable, and the size of each block.
- "Lock-Up Agreements" (often within underwriting or risk-factor sections) spells out the exact days and any early-release conditions.
For the SpaceX offering trading as SPCX, those sections in its 424B/S-1 on EDGAR hold the binding terms. The numbers in news coverage are summaries. The filing controls.
What happens to the share count when a lockup expires?
At expiration, the previously restricted shares can be sold. That increases the supply of freely tradable shares, the float, so more shares can change hands.
Whether and how that affects price depends on how many holders choose to sell, at what prices, and against how much buying interest exists. This article does not predict price moves, and the data on any single stock varies. The factual point is narrow: lockup expiration converts restricted shares into sellable shares, which raises the number of shares available to trade. Selling shares can also have tax consequences; the IRS explains how capital gains from selling stock are taxed at irs.gov.
What related IPO terms should you know?
Primary vs. secondary shares. Primary shares are newly created shares the company sells to raise cash. Secondary shares are existing shares sold by current holders; that money goes to the seller, not the company. A given IPO can include both.
Float. The shares actually available for public trading, excluding restricted insider holdings still under lockup.
Quiet period. A stretch around the IPO when the company and its bankers face SEC limits on promotional statements about the offering. Investor.gov and the SEC describe these communication restrictions as part of the registration process.
The bottom line on lockups
A lockup is a timing rule, not a verdict on a company. It delays when insider shares can be sold, usually for roughly three to six months, and the precise terms differ for every deal. For SPCX or any other listing, the real schedule sits in the prospectus on EDGAR, in the "Shares Eligible for Future Sale" and lock-up sections.
Sources
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