When a company first goes public or just after a financing most often there are tranches of shares that are locked – meaning they are not tradable by the owner – for some agreed upon period of time.
When there is a significant portion of the float becoming tradable in the near future it’s often a good time to look into how the company is doing and what the holders of those newly “Free Trading” shares might do.
When a company first goes public or just after a financing most often there are tranches of shares that are locked – meaning they are not tradable by the owner – for some agreed upon period of time.
When there is a significant portion of the float becoming tradable in the near future it’s often a good time to look into how the company is doing and what the holders of those newly “Free Trading” shares might do.
As noted in our blog, “Share Structure: Using it to your Advantage,” locked up shares and their subsequent unlocking affects available float and trading liquidity. In fact, the available float in many microcap companies is kept artificially low during the first six months to a year after an IPO due to lock lock-up agreements. This can help boost share price gains during the early days, but can put the brakes on momentum when shares are unlocked.
