Consequently, their high-volume selling activities could drastically impact a company's share price immediately after the company goes public. Simply put, company insiders tend to own disproportionately high percentages of stock shares compared to the general public. The chief purpose of an IPO lock-up period is to stop large investors from flooding the market with shares, which would initially depress the stock's price. Investors can sometimes save money by waiting until the lock-up period expires before buying the shares of a newly listed company. ![]() ![]() Depending on the company, the IPO lockup period. Lock-up periods are not required by the Securities and Exchange Commission (SEC) or any other regulatory body. Generally, the lockup period is a condition for exercising employee stock options.The chief purpose of an IPO lock-up period is to stop large investors from flooding the market with shares.A standard IPO lock-up period is typically 180 days, while lock-ups for SPAC IPOs normally last 180 days to one year. During a lock up period, shareholders are forbidden from redeeming or selling shares, generally for one of two reasons: to give a hedge fund manager time to. ![]() Most of the SPACs from 2019 and early 2020 provided that the SPAC sponsors are subject to a one year lock-up period. Investment banks that underwrite initial public offerings generally insist upon lockups of at least 180 days from large shareholders (1 ownership or more) in.
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