Before a company goes public, its shares are typically held by founders, employees, and early investors. A lock-up period is an agreement that restricts these existing holders from selling their shares for a set time after the IPO — historically around 90 to 180 days. The purpose is straightforward: it allows the newly public stock to begin trading without a large volume of pre-IPO shares being sold at once.

When a lock-up period ends, those previously restricted shares become eligible to trade. Whether holders choose to sell, and how the market absorbs any selling, depends on many factors. The end of a lock-up does not, by itself, tell you which direction a stock will move.

Traditional vs. Tiered Lock-Ups

Not all lock-ups look the same. A traditional lock-up uses a single expiration date — often 180 days — after which restrictions lift all at once. Some companies have instead used a tiered or staggered structure, in which shares become eligible to trade in several smaller steps over time. A tiered approach is generally intended to spread potential selling across multiple dates rather than concentrating it on one. Some tiered structures also tie certain releases to events such as an earnings report, or to conditions such as the stock trading above a stated level for a number of days.

The practical takeaway for investors is that “the lock-up” may not be a single date to circle on a calendar. It can be a schedule of several dates, each releasing a portion of previously restricted shares.

Lock-up expirations affect the supply side of a stock’s supply-and-demand balance. As more shares become eligible to trade, the pool of shares available on the market — often called the float — can grow. A larger float can affect how a stock trades, though the effect in any given case depends on demand, company fundamentals, broader market conditions, and the decisions of individual holders.

Because outcomes can move in either direction, it is worth noting both sides:

• More available shares meeting steady or rising demand may have little visible effect, or may improve how easily the stock can be traded.

• More available shares meeting weaker demand can add selling pressure.

This is why some investors track lock-up calendars: not to predict a result, but to understand when the supply of tradable shares may change. A small initial float — meaning only a modest percentage of total shares is available to trade at the IPO — can make these supply changes more noticeable, in either direction.

Many investors own index funds, which aim to track a market benchmark such as a broad U.S. stock index. When a stock is added to an index, funds designed to track that index generally need to hold the stock in roughly the proportion the index assigns to it. This buying is mechanical: it follows the index rules rather than a view on the stock’s value.

Each index provider sets its own rules for which companies qualify and how quickly a newly public company can be added. Common criteria include how long a company has traded publicly (a seasoning period), whether it meets certain profitability standards, and what share of its stock is publicly available. Because providers use different rules, the same newly public company can be eligible for one index well before another — or be ineligible for a particular index for a year or more.

How Index Rules Can Differ

To illustrate the range of approaches, the table below shows the kinds of criteria index providers commonly weigh. The specifics vary by provider and can change over time.

Because index funds following an index generally buy a newly added stock based on its available shares, a company with a small float can represent a relatively modest weight in an index even if the company is very large overall.

A recent IPO offers a factual illustration of these mechanics. In June 2026, Space Exploration Technologies Corp. (SpaceX) completed an IPO and began trading on the Nasdaq Global Select Market under the ticker SPCX. Public reporting on the company’s offering documents described two features relevant to this article:

• A tiered lock-up. Rather than a single expiration date, the company’s lock-up was reported to release previously restricted shares in steps over several months, with certain releases linked to earnings reports and other conditions, and a longer restriction applying to its founder and certain large holders.

• A split decision among index providers. Some index providers adjusted their rules to add the company relatively quickly, while at least one major provider kept its existing standards in place, which deferred any potential inclusion in its benchmark. Reporting also noted that the company’s publicly available shares represented a small percentage of its total shares at the IPO.

This example is provided for educational context only. It is not a recommendation regarding SPCX or any other security, and nothing here should be read as a view on how the stock has performed or may perform. Investors interested in any specific security should review the company’s own offering and disclosure documents and consider their personal circumstances.

Lock-up periods and index inclusion are two routine mechanics that can influence the supply of, and demand for, a newly public stock. Lock-up schedules affect when previously restricted shares may become available to trade; index rules affect whether and when index funds may need to hold a stock. Understanding these mechanics will not tell you where a stock is headed — markets are influenced by many factors — but it can help you read the news about new public companies with a more informed eye.

If you have questions about how IPOs, index funds, or newly public companies may relate to your own financial plan, the team at Wealth Strategy Group is glad to talk through your situation.

The information provided is for educational and informational purposes only and does not constitute investment advice, a recommendation, or a solicitation to buy or sell any security. It does not take into account any individual’s particular investment objectives, financial situation, or needs.

Investing involves risk, including the potential loss of principal. No strategy assures success or protects against loss. Past performance is no guarantee of future results. There is no assurance that any investment, including any newly public company, index, or index fund discussed in general terms here, will achieve any particular result.

References to specific securities or companies are for illustrative and educational purposes only and should not be construed as a recommendation to purchase or sell any security. Wealth Strategy Group and its representatives do not provide legal or tax advice. Investors should consult their own legal, tax, and financial professionals regarding their specific situation.

Indexes are unmanaged and cannot be invested in directly. Index inclusion criteria are set by independent index providers and are subject to change.

This material was prepared by Wealth Strategy Group. The opinions expressed are as of the date of publication and are subject to change.