Insights

Quantifying Lock-Up Overhang

Alphanume Team · March 17, 2026

Sizing the supply that unlocks relative to float.

Lock-up overhang is the share count of contractually restricted holdings that will become tradeable on a defined future date. Quantifying it correctly is the basis for sizing the magnitude of an expected supply event. The headline number — total locked-up shares — is straightforward to compute. The harder, more useful numbers are the relative measures: lock-up shares as percent of float, days-of-volume, and holder-category breakdowns.

The four core metrics

1. Total unlock share count. Sum of shares unlocking at the expiration date. From the lock-up agreement.

2. Unlock as percent of current float. Total unlock / current free float. A ratio of 1.0 means the float doubles at expiration; 5.0 means it expands 6x.

3. Unlock as days-of-volume. Total unlock / average daily volume. Indicates how many days of typical trading activity would be required to absorb the supply if all unlocked holders chose to sell immediately.

4. Holder concentration. Distribution of unlocked shares across holder categories (sponsor, founder, target insider, PIPE investor) and across individual large holders.

The threshold question

What makes a lock-up overhang "large" enough to matter? Rough rules of thumb from the data:

Overhang < 50% of float: Limited expected impact. Even full distribution wouldn't materially shift the supply-demand balance.
Overhang 50-200% of float: Moderate expected impact. Worth monitoring; possibly trade-worthy for HTB names.
Overhang 200-500% of float: Large expected impact. Typical for de-SPACs with high redemption rates.
Overhang > 500% of float: Extreme expected impact. Often the highest-conviction short setups, balanced against squeeze risk.

Days-of-volume as a sanity check

Days-of-volume converts the abstract "shares unlocking" into a more interpretable measure. A 10-day-of-volume unlock is absorbable; a 50-day-of-volume unlock is structurally meaningful; a 200-day-of-volume unlock will require months of elevated supply to clear.

The conversion uses average daily volume from a recent period (typically 20-60 days). For very thinly traded post-merger names, volume can be erratic — using median rather than mean can smooth out one-off event days.

Holder concentration matters

The same total unlock share count can have very different market impact depending on holder distribution:

Concentrated in event-driven funds: Likely rapid distribution. High immediate supply impact.
Concentrated in target founders: Variable. Some founders distribute immediately; many hold long-term.
Concentrated in sponsor: Most likely to distribute. Cost basis near zero.
Distributed across many small holders: Diffuse but slower-moving supply.

Reading the 13G/13D filings post-unlock can identify which large holders sold and which retained, providing useful feedback on holder behavior across the cohort.

Early-release trigger considerations

Many sponsor lock-ups include early-release triggers tied to share-price thresholds. Quantifying overhang requires accounting for these:

If the stock has been close to the early-release threshold, the lock-up may release weeks or months before the contractual expiration.
Early-release shifts the effective overhang date earlier.
The presence of early-release triggers itself caps post-merger rally potential — rallies past the threshold trigger the unlock.

The calculation in practice

For a typical de-SPAC at the 6-month mark:

Total shares outstanding: 100 million.
Free float (excluding sponsor + insiders + PIPE): 8 million.
Sponsor unlock at 12 months: 20 million.
Target insider unlock at 6 months: 40 million.
PIPE shares (already unlocked at PIPE resale registration effective): 25 million.

The 6-month target-insider unlock alone is 5x the float. With the sponsor unlock six months later, the cumulative unlock is 7.5x. Days-of-volume on 200K average daily volume: insider unlock = 200 days; cumulative = 300 days.

These numbers signal a structurally negative supply outlook for the 6-18 month post-merger window.

Limitations of the metrics

Two caveats:

Holder behavior is not perfectly predictable. Some unlocked holders will not sell. The quantified overhang is the maximum, not the realized.
Market expectations are already partially priced. If a 5x-of-float unlock is widely anticipated, some of the supply pressure is already in the pre-unlock stock price.

Even accounting for these, the magnitude and dating of overhang remains one of the cleaner inputs available for systematic positioning.