Lock-up Expiration Charts: Tracking the Direct Impact on New Stock Prices
Q1: Does a stock always drop on the day its lock-up restriction expires?
A1: No. Empirical studies show that share prices frequently suffer the majority of their decline during the 15 to 30 trading days leading up to the unlock date. On the actual expiration day, if short-covering volume exceeds immediate insider sell orders, the stock can experience a temporary counter-trend bounce.
Q2: How do restricted stock units differ from venture capital shares during an unlock?
A2: Restricted stock units held by employees are subject to immediate income tax withholding upon vesting and delivery, which frequently forces automatic sales of 30% to 50% of the underlying equity simply to cover tax liabilities. Venture capital funds, by contrast, typically distribute actual shares directly to their limited partners, who then decide individually whether to hold or execute sales through their respective custodians.
Q3: Where can retail investors find the exact date of a company's lock-up expiration?
A3: The exact terms are filed with the U.S. Securities and Exchange Commission in the final prospectus, known as the Form 424B4 filing, under sections titled "Shares Eligible for Future Sale" and "Underwriting."
