After an IPO, the price of the stock will fluctuate as investors buy and sell the shares. IPOs are typically highly volatile for the first several months of their existence. The chief purpose of an IPO lock-up period is to stop large investors from flooding the market with shares, which would initially depress the stock's price. Simply put, company insiders tend to own disproportionately high percentages of stock shares compared to the general public. Consequently, their high-volume selling activities could drastically impact a company's share price immediately after the company goes public.

Answer given by Shubhamm Sir at 29-Mar-2023 05:28 PM