Instead, lock-up periods are either self-imposed by the company going public or required by the investment bank underwriting the IPO request. Are Companys Legally Required to Set Lock-Up Periods? contact@marketbeat.com contact@marketbeat.com The additional Buy results in the stocks Moderate Buy consensus rating, while the $27.5 average price target suggests one-year gains of 49%. The technical storage or access that is used exclusively for statistical purposes. Sign in to your free account to enjoy all that MarketBeat has to offer. IPO vs. Additionally, IPO lockups can protect common investors by creating a period of time in which the health and profitability of the company is further revealed while insiders cannot sell shares. This prevents the appearance of providing insider information to third parties such as analysts or investment management firms. How Can a Lock-Up Period Help Hedge Funds Maximize Investor Return? Underwriter in Finance: What Do They Do, What Are Different Types? A quiet period happens before the SEC approves the initial public offering. Each investors lock-up period expiration is tied to the date they began investing with the fund. This article will go into detail about what a lock-up period is and how it is different for a hedge fund as opposed to an initial public offering. In anticipation of this event, many investors will sell their shares in the days leading up to the expiration date to get ahead of the drop. This is the moment when the early comers, generally large shareholders, are finally allowed to offload shares on the market. Disclaimer: A SCOOP Rating (Wall Street Consensus of Opening-day Premiums), is a general consensus taken, at press time, from Wall Street and investment professionals concerning how well an IPO might perform when it starts trading. For a hedge fund, this includes inviting investors to invest in the fund. Simply put, company insiders tend to own disproportionately high percentages of stock shares compared to the general public. Lock-up expirations are traditionally bad news for investors. Insurance company Lemonade's post-IPO lockup of insider stock selling is set to expire Tuesday.