Lock-Up Expiry Flood
Definition
After an IPO, insiders are typically restricted from selling for 3–6 months. When this lock-up expires, the 97% of shares retained by founders, early employees, and VCs begins flowing into the public market, potentially swamping the thin float. Sellers include VCs who invested at a fraction of the public price (e.g., a 38x return on SpaceX at its 2020 valuation), ensuring they profit regardless of the price at which index funds are forced to absorb the supply.
Key Discussions
- The $3 Trillion IPO Trap Nobody's Talking About (1d ago): After an IPO, insiders are typically restricted from selling for 3–6 months. When this lock-up expires, the 97% of shares retained by founders, early employees, and VCs begins flowing into the public market, potentially swamping the thin float. Sellers include VCs who invested at a fraction of the public price (e.g., a 38x return on SpaceX at its 2020 valuation), ensuring they profit regardless of the price at which index funds are forced to absorb the supply.