Stock Lingo, IPO Lock-up
Lock-up? What do you mean lock-up?
Well, in the stock lingo world, IPO lock-up simply refers to the period of time after a company first goes public that insiders and majority stake holders cannot sell shares. The period of time is 90 to 180 days, and the reason they do this is so insiders cannot simply dump their shares and walk away. Once the lock-up period passes, then insiders and major stake holders can do what they wish with their shares.
A great example of being on the wrong side of the fence for a stock lock-up, think of Vonage (VG). The stock went public on May 25th 2006 at $17 per share. Six months later the stock was trading under $7, and there was nothing major shareholders could do but watch their investment lose value.
And for those who haven’t yet heard of an IPO before, it stands for initial public offering. This is the when a stock first goes public on the market. Or, in simpler terms, the first day you can buy shares of that company stock with your favorite broker. That 9:30 AM opening bell rings, and the trading begins babie!
