Next Test for Tech IPOs: Lockup Expirations

Starting in September, a flood of shares in the newest public tech companies will hit the market as employees and pre-IPO investors—those who invested when the companies were private—are allowed to sell. That is likely to intensify volatility in tech share prices, putting pressure on weakly performing stocks like Uber and Lyft and potentially halting rallies in hot stocks like Zoom Video.

While eight major tech companies went public in the first half of the year, also including Pinterest and CrowdStrike, only between 7.5% and 15% of their total shares are available for trading. That’s because insiders and early shareholders are blocked from selling their shares, usually for 180 days from the IPO date, by lockup agreements. Once those restrictions are lifted, as many as six to seven times the existing number of shares could become available.