An IPO lock-up expiration is the date when pre-IPO holders such as founders, officers and early investors can start selling. On small caps it is usually 90 to 180 days after pricing. The only reliable date is in the final prospectus. Check the 424B4’s “Underwriting” and “Shares Eligible for Future Sale” sections, and read the early-release clause.
Most free lock-up calendars just add 180 days to the listing date. That is a guess, not a fact. A small cap that IPO’d with a few million shares in the float can have three or four times that much stock sitting behind a lock-up. You want the real terms, not a website’s default math.
This guide shows you where those terms sit in the filing. It explains how to read the language that lets the underwriter release shares early. It also gives you a template for counting unlocking shares against the public float. If you trade Canadian names, this is the US version of the TSXV escrow release schedule.
In this article
- What does IPO lock-up expiration mean for a small cap?
- How long are IPO lock-up periods: 90 vs 180 days?
- How to find the lock-up date in the 424B4: step by step
- Template: count the unlocking shares against the public float
- How does lock-up expiration affect small cap IPO stock prices?
- IPO lock-up vs TSXV escrow: the US and Canadian versions
- Should you buy before lock-up expiration, or short into it?
- Lock-up expiration FAQ
What does IPO lock-up expiration mean for a small cap?
It means shares that could not legally be sold under the underwriting agreement can now be sold. On a small cap, that new supply can be large compared with the shares that actually trade.
A lock-up is a contract, not an SEC rule. Before the IPO prices, the underwriter gets directors, officers and most pre-IPO shareholders to sign agreements not to sell or hedge their shares for a set period. The shares sold in the IPO trade freely from day one. Everyone else waits.
On a large cap, the IPO tranche is often a big pool of stock with deep liquidity. On a small cap, the IPO might be a couple of million shares, while insiders and early investors hold most of the company. When the lock-up ends, the stock that can trade can multiply overnight.
How long are IPO lock-up periods: 90 vs 180 days?
180 days is the market convention, but it is not fixed. Small-cap IPOs show a wide range. You will see 90 days, 180 days, and sometimes longer periods for certain insiders. Some deals use staggered releases, with different groups unlocking on different dates.
Two details that free calendars often miss:
- Different holders, different terms. Officers and directors might be locked for one period and other pre-IPO holders for another. Some holders may not be locked at all.
- The company has its own lock-up. The issuer usually agrees not to sell new shares for a set period after the IPO. When that ends, the company is free to raise money again, which is a separate risk from insiders selling.
How to find the lock-up date in the 424B4: step by step
The 424B4 is the final IPO prospectus, filed under SEC Rule 424(b)(4) after pricing. The S-1 drafts filed earlier can change, so work from the final document.
- Pull the filing. Search the company on EDGAR and filter by form type 424B4. If you do not see one, check 424B1 or 424B3. Foreign issuers register on Form F-1, but the prospectus sections are similar.
- Note the prospectus date. It is on the cover page. Lock-ups are usually written as a number of days “after the date of this prospectus.” That is the pricing date, not the first trading day or the closing date. Count from the date the wording names.
- Open “Shares Eligible for Future Sale.” This section gives the share count after the offering and how many shares trade freely. It also shows how many are restricted or locked up. It explains how Rule 144, Rule 701 and any S-8 registration of option shares will apply once the lock-up ends.
- Open “Underwriting” (sometimes “Plan of Distribution”). Find the lock-up paragraph. Write down who signed, the length of the lock-up, the exceptions, and the separate company lock-up.
- Search the early-release language. Use Ctrl+F for “sole discretion,” “release,” “waive” and “lock-up.”
- Open “Principal Stockholders.” The beneficial ownership table shows who holds what. You need it to split locked shares between affiliates (insiders and control holders) and non-affiliates.
Reading the underwriter early-release language
Most underwriting sections contain wording along these lines: the representative may, in its sole discretion, release all or part of the locked shares at any time. That turns the expiration date into a ceiling, not a guarantee. Shares can come loose sooner.
There is one guardrail. FINRA Rule 5131 requires lock-up agreements to say that a release or waiver for an officer or director must be announced through a major news service at least two business days before it takes effect. That notice rule covers officers and directors. A release for other holders, such as a fund, may not come with the same public notice.
Some prospectuses also include price-triggered early releases. Under these, part of the lock-up ends early if the stock trades a set amount above the IPO price for a set number of days. They are more common in larger IPOs, but read for them anyway.
Template: count the unlocking shares against the public float
The date tells you when. This template tells you how much. The numbers below are hypothetical and only show the method.
| Line | What to pull | Where to find it | Hypothetical |
|---|---|---|---|
| A | Shares outstanding after the IPO | The Offering / Shares Eligible for Future Sale | 10,000,000 |
| B | Public float at IPO (IPO shares, plus over-allotment if exercised) | Cover page / Underwriting | 2,500,000 |
| C | Locked shares held by affiliates | Principal Stockholders + Underwriting | 1,500,000 |
| D | Locked shares held by non-affiliates | Shares Eligible for Future Sale | 6,000,000 |
| E | Shares not subject to any lock-up | Shares Eligible for Future Sale | 0 (verify) |
| F | Affiliate Rule 144 cap per three months: the greater of 1% of outstanding or average weekly volume over four weeks | Your own volume data | 400,000 |
| G | Unlock supply estimate = D + the smaller of C or F | Calculated | 6,400,000 |
| H | Unlock ratio = G / B | Calculated | 2.56x |
In this hypothetical, the stock that can come loose is more than two and a half times the float that has been trading. The affiliate cap comes from Rule 144. Non-affiliates who have held for a year can generally sell without those limits.
Three things can change the result:
- A resale registration can register insider shares, which takes away the Rule 144 volume cap.
- Restricted shares need their legends removed and must be deposited with a broker before they can be sold, so not every share hits the tape on day one.
- The company lock-up ending can bring new shares from an offering, on top of the insider supply.
How does lock-up expiration affect small cap IPO stock prices?
There is no fixed outcome. Lock-up expiration adds potential supply, and how much of it actually sells depends on who the holders are and what they paid.
Academic work, going back to Field and Hanka’s 2001 paper in the Journal of Finance, found a small but statistically significant average decline around lock-up expiry. The drops were larger when venture capital holders were unlocking. Because the dates are public, part of the move can happen before the date itself.
On small caps, the unlock ratio matters more than the calendar. Say a ticker IPO’d at a low price and ran 300%. Early holders with a tiny cost basis have every reason to sell. If the stock is below the IPO price and insiders are underwater, they may hold. Read the cost basis, not just the date.
Watch the filings around the date. Affiliates selling above the Rule 144 thresholds file a Form 144 notice. An early release for an officer or director should appear as a press release.
The Fockets Terminal ties big moves to the filing behind them, whether that is an offering, an 8-K, an insider buy or nothing. That tells you whether a slide into the unlock has a filing behind it. If the company lock-up has ended and the company raises money, here is what Terminal data shows: runs where the filing was a priced offering closed down 4.3% on average, and 65% faded.
IPO lock-up vs TSXV escrow: the US and Canadian versions
Both lock up insider shares. They are built differently.
| Item | US IPO lock-up | TSXV escrow |
|---|---|---|
| Who sets it | A contract with the underwriter | Exchange policy and an escrow agreement |
| How shares release | Usually all at once at expiry, unless staggered | In tranches on a set schedule |
| Early release | At the underwriter’s discretion; officer and director waivers need FINRA-required notice | Governed by the escrow agreement and exchange policy |
| Where to read it | 424B4: Underwriting and Shares Eligible for Future Sale | Listing documents on SEDAR+ |
The practical difference is the shape of the supply. A US lock-up tends to be one cliff. Escrow comes out in steps. The TSXV escrow guide walks through mapping those tranches.
Should you buy before lock-up expiration, or short into it?
Neither is a rule, and nobody should hand you the answer. Buying ahead of a large unlock means taking on known supply risk. Shorting into a well-known date means joining a crowded trade, often with a high borrow cost and squeeze risk on a thin float.
Before you take either side, check the borrow fee and short interest. Run the unlock template and set your own size and stop. Be extra careful with tiny-float IPOs that rip on no news near the unlock. Hype runs ahead of a supply event are exactly where late buyers get used as exit liquidity.
Lock-up expiration FAQ
Are free lock-up expiration calendars accurate?
They are a starting point. Many count 180 days from the IPO date by default. They can miss shorter or staggered terms, different terms for different holders, and early releases. Confirm every date in the 424B4.
Can a lock-up end before the date in the prospectus?
Yes. The underwriter can usually waive it at its discretion, and some deals have price-based early releases. Releases for officers and directors must be announced at least two business days before they take effect.
Does a direct listing have a lock-up?
Usually not in the standard sense. There is no underwriter selling new shares, so there is normally no underwriter lock-up, and existing holders can often sell from the first day. Read the listing documents to confirm.
Does a Form 144 at the unlock mean insiders are dumping?
It means an affiliate has given notice of a proposed sale. It does not prove the sale will happen, or that it will happen all at once. Treat it as one input, together with the size compared with the float.
Want to work through a 424B4 with other traders who read the filing before they trade? Come into the free Fockets Discord. Ask questions, share your own unlock math, and see how members think through supply events. It is a place to learn the process, not to follow anyone’s trades.
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Disclaimer: This post is for educational purposes only and is not financial advice. Fockets Trading does not make buy or sell recommendations or price predictions. Small-cap stocks are volatile and you can lose money. Do your own research, verify every figure in the primary filings, and size your own risk.
