Lock-up period

A lock-up period is a set timeframe after a company goes public (IPO) when insiders—like founders, executives, and early investors—are legally prohibited from selling their shares. You'll see this mentioned in SEC filings because it's a rule designed to prevent a flood of insider selling that could tank the stock price right after the IPO. Once the lock-up expires (typically 180 days), insiders can finally cash out, which sometimes causes the stock to dip as supply increases. For example, if TechStartup Co. goes public in January with a 6-month lock-up, the founders can't sell until July. It's basically a cooling-off period that protects regular investors from getting blindsided.