The IPO Isn't the Liquidity Event. It's the Start of One.

The going-public narrative treats the IPO date as a finish line. Shares list, a ticker appears, and the assumption is that liquidity has arrived. For the company's actual shareholders, that's rarely true on day one, and for many of them it isn't true for months.

What a lockup actually is

A lockup is a contractual restriction, negotiated between the company and its underwriters, that prevents insiders, employees, and pre-IPO investors from selling shares for a set period after listing. Standard terms run 90 to 180 days, though the exact length and who it applies to varies by deal.

The stated purpose is price stability. Underwriters don't want a flood of insider selling crashing the stock in its first weeks of trading, since that undermines confidence in the deal they just priced. The unstated effect is that a large share of the company's actual ownership, often the majority of it by value, is legally barred from trading even though the company is technically public.

Lockups aren't a single cliff

The retail framing is that a lockup expires and shares dump on one date. In practice, well-structured deals stagger it:

• Early release for a subset of holders, sometimes tied to a triggering stock price rather than a fixed date

• Tiered expiration, where different classes of holders (VCs, employees, founders) unlock on different schedules

• 10b5-1 trading plans that let insiders pre-schedule sales during open windows, spreading supply out rather than concentrating it

  
  

So "the lockup expires" isn't one event. It's a sequence of smaller liquidity gates that continue to open for months after the listing.

The scale of what's held back can be enormous. When SpaceX went public in June, only about 4% of its roughly 13 billion shares outstanding made up the float, since the base offering floated just 555.6 million shares. The rest, including Musk's own stake of more than 5.5 billion Class B shares, stayed locked, with Musk's block alone subject to a separate 366-day restriction that runs until June 2027. CoreWeave shows the same mechanism at a more typical scale: its prospectus locked up 84% of shares until two trading days after its first post-IPO earnings report, an unlock that hit in August 2025. In the time since its March 2025 IPO, insiders, mostly the company's three founders, have sold more than $2.3 billion in stock.

Whether it's a mid-cap AI cloud provider or the largest IPO in history, the pattern holds: most of a newly public company's actual share count is still restricted the day it starts trading.

What fills the gap

Between the IPO date and full float, several mechanisms move shares without violating lockup terms:

• Block trades, where a bank buys a large position from an insider off-market and re-distributes it, sometimes before the lockup even lifts if structured as a forward sale

• Insider trading windows, the quarterly periods post-earnings when executives are cleared to transact

• Secondary sales structured pre-lockup-expiry, where an investor sells a forward claim on shares that will free up later

  
  

None of this is retail-accessible. It's the same institutional plumbing that prices pre-IPO secondaries, just operating on the other side of the listing.

What the expiry itself actually looks like

Pinterest and Zoom both listed on the same day in April 2019, and both had their lockups expire on the same day six months later. Pinterest, up roughly 40% from its IPO price going in, dropped modestly around the expiry and mostly held. Zoom, which had nearly doubled since its IPO, sold off harder, down more than 6% the day after unlock, as more early holders had reason to cash in gains. Jumia, which had already lost half its value since listing, saw a sharper post-lockup drop before recovering. The pattern: the direction of the pre-lockup stock move, not the lockup date itself, is usually what predicts the size of the reaction. The lockup is a mechanical unlock but the selling decision is still a human one.

What the Broader Sample Shows

The Pinterest, Zoom, and Jumia cases are illustrative, but they're three names. A wider look across 55 venture-backed U.S. tech IPOs from 2019 to 2025 shows the same pattern holding at scale.

The day-one pop is real and reliable: a median gain of 38% over the offer price, positive in 91% of listings. But measured from that first-day close rather than the offer, the picture flips. The median name is roughly flat at 30 days, down 4.3% by 90 days, and down 15.5% by the time the lockup expires around day 180, the single worst point in the sequence. It recovers only partially from there, still down 8.3% at the one-year mark.

Why this matters for how you think about "public"

The mental model of private equals illiquid and public equals liquid breaks down once you look at the mechanics. A pre-IPO company running structured tender offers can have more actual trading volume in its stock, relative to its cap table, than a newly public company still six weeks into a 180-day lockup.

Liquidity is a gradient that starts in the earliest primary rounds and doesn't fully resolve until lockups clear, insider windows normalize, and the float matures. The IPO is one gate on that path, not the end of it. For anyone pricing risk on either side of the public line, the operative question isn't "is this liquid," it's "where on the gradient is this, and what unlocks the next step."

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IMPORTANT DISCLOSURE This content is published by PrePublic Equity Partners ("PEP") for informational and educational purposes only. It does not constitute an offer to sell, or solicitation of an offer to buy, any security. No such offer or solicitation is made except by means of a confidential Private Placement Memorandum or other definitive offering documents delivered to eligible investors only. PEP is not a registered investment adviser with the SEC or any state securities regulator. Nothing in this article should be construed as personalized investment, financial, legal, or tax advice. All views are the opinions of the author as of the date of publication and are subject to change without notice. Private market and pre-IPO investing involves a high degree of risk, including illiquidity, potential total loss of principal, and reliance on unverified private company data. Past analytical observations are not indicative of future results. PEP and its affiliates, officers, or employees may hold financial interests in companies discussed in this article. PEP reserves the right to buy or sell such positions at any time without notice. PEP does not receive compensation from issuers mentioned in its research. PEP is an independently operated subsidiary of Alumni Ventures, LLC.