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Stats › Listings, IPOs and corporate actions › IPO lockup expiry

IPO lockup expiry costs about 1.5% and the volume increase never goes away

Days -1 to 0: -1.15%-1.15%Days -1 to 0Days -4 to 0: -2.03%-2.03%Days -4 to 0Days +1 to +3: 0.23%+0.23%Days +1 to +3

Market-adjusted cumulative abnormal returns around IPO lockup expiry, 1,053 IPOs from 1996 to 1998. Medians minus 0.80% and minus 1.76%, with 42% and 38% of events positive. The third bar is the point: there is no rebound. The plotted path over days minus twenty to plus twenty shows a drop of about 2.5% with no meaningful reversal.

On the day insiders are first allowed to sell, the stock drops about 1.5% over three days and does not recover afterwards. Trading volume rises 40% permanently. The newest verifiable sample covers IPOs from 1998.

-1.5%Three-day abnormal return around lockup expiry, across 1,948 agreements
40%Permanent increase in average trading volume
-2.03%Market-adjusted return over days minus four to zero, on a separate sample
-3.29%The same window for high-volatility IPOs

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