IPO Lock-Up Expiry: How Much Stock Unlocks Day 181

You bought 400 shares of a newly listed company at $38 in the weeks after it went public. The stock has drifted sideways. Then a headline lands: lock-up expires Monday, and the piece under it says 225 million shares are about to become sellable — nine times everything currently trading.

The number in that headline is real. It is also close to useless on its own, because “sellable” and “sold” are different quantities, and the distance between them is where the entire question lives. What matters is how many shares actually reach the tape in the weeks after expiry, measured against how many shares the stock trades on a normal day.

Here is the company we will follow the whole way through. It listed 25 million shares out of 250 million outstanding — a 10% float. Since listing, it has traded about 2.5 million shares a day. The lock-up runs 180 days from the pricing date, so day 181 falls in the third week of September if the IPO priced in March.

What actually unlocks on day 181

Every share held by founders, employees, and pre-IPO investors that was covered by the lock-up agreement. That is 225 million shares here: outstanding minus float, with no adjustment for anything.

The agreement itself is a contract signed with the underwriting banks, not an SEC rule. There is no statute that says 180 days. When the clock runs out, the contractual restriction lifts, and those holders may place sell orders — subject to securities law that keeps applying regardless.

Two things do not change that morning. Affiliate status does not lapse, so officers, directors, and large holders stay bound by Rule 144’s volume and manner-of-sale limits. And nobody is obliged to sell a single share.

The arithmetic, line by line

Four steps from the prospectus to something you can actually use:

1. Locked shares = 250,000,000 − 25,000,000 = 225,000,000
2. Multiple of existing float = 225,000,000 ÷ 25,000,000 = 9.0x
3. Trading days of average volume to absorb every unlocked share = 225,000,000 ÷ 2,500,000 = 90 days
4. If 8% of unlocked shares are actually sold in the first month: 225,000,000 × 0.08 = 18,000,000 shares, which is 18,000,000 ÷ 2,500,000 = 7.2 days of average volume

Step 4 is the step to argue with, and I want to be blunt about it. There is no published, reliable figure for the share of unlocked stock that gets sold. I use 8% as an illustration because it sits in the middle of a range that plausibly runs from near zero to well past 30%. Change that one input and the answer moves by an order of magnitude. That sensitivity is the finding, not the 7.2.

Run the extremes on our company to see it. At 2% sell-through, 4.5 million shares hit the market — 1.8 days of volume, indistinguishable from a quiet week. At 25%, that’s 56.25 million shares, or 22.5 days of volume arriving inside a single month. Same company, same lock-up, same headline. Wildly different experience for the person holding 400 shares.

Why float percentage does most of the work

Our company floated 10%. Suppose it had floated 40% instead — same 250 million shares outstanding, same business, just a bigger slice sold at IPO. Locked shares fall to 150 million, and because daily volume tends to scale with float, average volume rises too. The unlock stops being a nine-fold supply event and becomes a 1.5-fold one.

This table assumes 250,000,000 shares outstanding throughout, a single full release on day 181, and daily volume set at 10% of float — rough, but a defensible starting point for a recently listed name.

Read the top row against the bottom one. Identical share count, identical assumptions about behaviour, and the supply overhang differs by nineteen times. Tightly floated listings carry structurally larger unlocks, and it is not a close call.

Notice how fast the last column collapses once you assume a realistic sell-through. Even the 5% float row lands at 15 days of volume. Spread across a few weeks, that is absorbable. Compressed into one session, it is not. Timing does as much work here as size does.

You can find your own row in about a minute. The prospectus gives shares sold in the offering and shares outstanding after it; divide one by the other.

Staggered releases, and what they’d have to look like

Plenty of recent lock-up agreements do not release everything on one date. Some free a slice shortly after the first earnings report and the balance at 180 days. Others release in tranches only if the stock trades a set percentage above the IPO price for a stated number of sessions.

Rather than guessing which structure a company chose, turn the question around: what release schedule would keep each individual event small enough to disappear into normal trading? Call “small enough” three days of average volume — below that, ordinary market activity tends to swallow the supply without anyone noticing.

Back to our company: 225 million locked, 2.5 million ADV, and assume 10% of each released tranche gets sold. A single full release puts 22.5 million shares on the market, or 9 days of volume. Split in half, each event is 4.5 days — still heavy. Thirds bring it to exactly 3.0, sitting right on the line. Quarters bring it to 2.25 days, and twelve monthly tranches to 0.75.

So the answer is four tranches or more, given those inputs. That is not a prediction about any company; it is what the arithmetic requires under stated assumptions. A company structuring three releases instead of four is balanced on the threshold.

The same reverse logic works on sell-through. For a single full release to stay under three days of volume, sales would need to stop at 3 × 2,500,000 = 7,500,000 shares, which is 7,500,000 ÷ 225,000,000 = 3.3% of the unlocked pile. That is a low ceiling. Most single-date expiries on tightly floated names will punch through it.

The Rule 144 constraint people forget

“Insiders can dump everything on Monday” is the claim you will see most often, and for affiliates it is simply wrong. Under Rule 144, an affiliate’s sales in any three-month period are capped at the greater of 1% of shares outstanding or the average weekly reported volume over the preceding four weeks.

For our company, 1% of 250 million is 2.5 million shares per affiliate per quarter. But with ADV at 2.5 million, average weekly volume runs about 12.5 million — the larger number, so that becomes the binding cap. Liquidity buys headroom.

Now imagine the same share count in a stock that trades only 300,000 shares a day. Weekly volume is 1.5 million, the 1% test wins at 2.5 million, and that cap represents more than eight days of normal turnover for a single holder.

Weekly volume assumes five trading days. The pattern is consistent: in liquid names the volume test binds and is generous, in thin names the 1% test binds and bites hard. Non-affiliates who have satisfied the holding period face far lighter restrictions, which is why lumping everyone together as “insiders” misleads. FINRA’s stocks page covers the broader background on share ownership and trading restrictions.

Does T+1 settlement change any of this?

It changed when money moves, not how many shares exist. Since May 28, 2024, US equity trades settle one business day after the trade date instead of two, under rules the SEC adopted in February 2023 to shorten the cycle (SEC, Shortening the Settlement Cycle to T+1).

An affiliate selling into expiry day now receives proceeds a day earlier and delivers shares a day earlier. That compresses the operational window. It does not create or destroy one share of supply. If someone tells you T+1 made lock-up expiries more volatile, ask which share count changed — none of them did.

The place it genuinely matters is the stock-loan and hedging plumbing around the event, where borrow recalls and delivery obligations now run on the same shortened clock.

The other claim: “the stock always drops”

The eligible-supply increase is real and it is large. But the expiry date is printed in the prospectus months in advance, which means anyone who wants to position around it has had half a year to do so. That does not guarantee the price is unaffected. It does make “everyone will be surprised on Monday” a poor description of what is happening.

Compare the two ends of the range. A 40% float name with 5% sell-through faces 7.5 million shares against 10 million daily volume — 0.75 days, noise. A 5% float name with 25% sell-through faces 59.4 million shares against 1.25 million daily volume: 47.5 days of turnover. Both events carry the same label. The supply arithmetic between them differs by roughly sixty times.

Where this estimate stops describing reality

The lock-up already ended. Price-trigger provisions can release tranches once the stock closes above a threshold for a set number of sessions. If that fired in month three, day 181 is an anticlimax.

Underwriters waived it. Banks can release holders early, in whole or in part, at their discretion. A waiver announced ahead of schedule moves the supply event to a date nobody had circled.

A secondary offering replaces the drip. If the company runs a marketed follow-on instead, insiders sell in one negotiated block at a set price. Different mechanism, different pricing, and the volume math above does not describe it.

Most locked shares are not motivated supply. A large share of that 225 million may sit with founders and venture funds who have no intention of selling in month seven. Treating the full count as sellers-in-waiting overstates the pressure badly.

RSU settlement. Where restricted stock units settle near the lock-up window, mandatory sell-to-cover for tax withholding produces supply unrelated to anyone’s opinion of the company. Forced, mechanical, and frequently concentrated on one date.

Volume is not stable. The 10%-of-float assumption for ADV is a starting point, nothing more. Newly listed shares often trade at several multiples of that in the opening weeks, then decay. A stale ADV distorts every “days of volume” figure here.

Dual-class structures. If the locked shares are a class that must convert before sale, or that carries transfer restrictions surviving the lock-up, the eligible count is lower than plain subtraction suggests.

What this does not tell you

It does not forecast a price. Supply eligibility is one input; demand, index inclusion, short interest, borrow cost, and the next earnings report all sit alongside it, and any one of them can dominate on the day.

The sell-through percentages throughout are illustrations, not measurements. I do not have a verified dataset of realised insider sell-through by float band, and I am not going to dress up a guess as one. The honest use of the numbers above is to see how violently the answer swings when that single assumption moves.

The Rule 144 table simplifies hard. It omits holding-period requirements, Form 144 filing thresholds, manner-of-sale conditions, and the treatment of shares acquired at different times. Anyone whose own shares are affected should read the rule text at sec.gov rather than trusting a five-row table.

And every figure assumes one share class, no buyback running concurrently, no secondary offering, and no change in shares outstanding between IPO and expiry. Real capitalisation tables move.

FAQ

How long is an IPO lock-up period?

Most commonly 180 days from the pricing date. Terms from 90 to 365 days appear, and staggered structures with releases at 90, 180, and 270 days have become common. Because it is a private contract with the underwriters rather than a statutory requirement, there is no single legal number — the actual terms are in the prospectus.

How many shares become tradeable when a lock-up expires?

Shares outstanding minus the public float, in the simple full-release case. On 250 million outstanding with a 25 million share float, that is 225 million shares, or nine times the existing float. Raise the float to 20% and the multiple falls to 4x; at 40% it is 1.5x. Float percentage is the biggest single driver.

Does the stock price drop on lock-up expiration day?

Sometimes, and the size of any effect scales with how much supply arrives relative to normal volume. A 40% float name with 5% sell-through produces under one day of average volume, which is unlikely to register at all. A 5% float name with 25% sell-through produces 47.5 days of it. The date itself is disclosed months ahead, so it is not new information.

Can insiders sell everything the day the lock-up ends?

Affiliates cannot. Rule 144 caps them per three-month period at the greater of 1% of shares outstanding or the trailing four-week average weekly volume. On 250 million shares outstanding with 300,000 daily volume, that cap works out to 2.5 million shares per affiliate per quarter — about eight days of normal turnover. Non-affiliates who meet the holding period face much lighter constraints.

How do I find the lock-up expiry date for a company?

It is in the IPO prospectus on EDGAR at sec.gov, under the underwriting section or the one titled “Shares Eligible for Future Sale.” That section usually also lists how many shares become eligible at each future date, which tells you far more than the single headline date does.

How fast can the market absorb unlocked shares?

Divide shares actually sold by average daily volume. At 10% float on 250 million outstanding with 10% sell-through, that is 22.5 million ÷ 2.5 million = 9 days of volume. Spread over a quarter, it adds about 14% to daily turnover. Compressed into one week, it is roughly 180% of it. Identical shares, completely different pressure.

Does T+1 settlement affect lock-up expiries?

Only the settlement leg. Trades executed on or after May 28, 2024 settle one business day later rather than two (SEC). Share counts, eligibility dates, and Rule 144 caps are untouched. The real effect shows up in stock-loan recalls and delivery timing around the event.

Where to check the real numbers

To test any of this against a specific listing, open the prospectus section called “Shares Eligible for Future Sale.” It gives the share count eligible at each date, which lets you swap my assumed float percentage for the real one and rebuild the first table in a spreadsheet in roughly ten minutes.

Read the Rule 144 text alongside it for the affiliate caps, then look at the company’s later Form 144 filings. Those show proposed sales rather than eligibility. Eligibility is a ceiling; Form 144s are much closer to the floor of what is genuinely moving.

This article is general information, not financial advice. See our disclaimer.

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