Lyft (LYFT) shares wavered during extended trading Wednesday after the company said it would allow company directors and officers to sell their shares at an earlier date than previously scheduled, following the company’s March initial public offering.
The announcement came in a securities filing Wednesday after market close.
“The lock-up period is scheduled to end on September 24, 2019, which falls within the Company’s quarterly blackout period that commences at the end of the day on August 31, 2019,” the company said in the filing. “Therefore, in accordance with the lock-up agreements with the underwriters, the lock-up period will end at the open of trading on August 19, 2019, which is ten trading days prior to the commencement of the Company’s quarterly blackout period. The Company will also release the market standoff agreements when the lock-up period expires.”
Lyft expects that about 257.6 million shares of Class A common stock may become eligible for sale in the public market beginning August 19. This includes about 12.8 million of Class B shares of common stock converted into Class A stock.
Newly public companies are typically subject to a lock-up period preventing insiders including founders, directors and other employees from selling their shares for a designated period of time. The restriction is intended in large part to prevent these investors from injecting large numbers of shares into the market, which could send stock prices lower by quickly increasing supply. Moreover, high-volume selling from company insiders and early investors can give the appearance of a lack of faith in the growth prospects of a company.
Shares of Lyft, which had been up as much as 13.29% during extended trading, erased most of its gains after the announcement. The stock rose 0.63% to $60.68 per share as of 4:47 p.m. ET, before rising again during the company’s conference call.
The filing coincided with the company’s quarterly results also released after market close Wednesday. Lyft topped consensus expectations, and guided toward narrower losses for the year than had previously been expected.
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Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
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