Twitter Inc (NYSE:TWTR) shares will not be available for immediate sale unlike Facebook Inc (NASDAQ:FB) where the investors and officers served a shorter lock-up period. The lock-up period for Twitter shares is much longer.Twitter IPO

Twitter follows old norms

Some rank-and-file executives can sell 9.9 million shares starting from February 15, 2014 to cover income tax from vesting shares. However, this totals to just 1% of the total shares outstanding. Executives, directors and owners of large amounts of stock will not sell their holdings for at least 181 days after the IPO, which implies that the lock-up period will be over by May 6, 2014. Investor confidence will be boosted with the 181 days lock-in period as an early sale of the relatively new share can create downside pressure, says a report from USA TODAY.

Francis Gaskins of IPO Desktop Premium told USA TODAY that Twitter Inc (NYSE:TWTR) “Really tightened up the lockup,” and added, “this is not going to be a problem in the market.”

Twitter different from Facebook, Google

Setting a 181 day lock-up period for its shares, Twitter Inc (NYSE:TWTR) has actually returned to the past norms followed in case of IPOs, and is still the most commonly followed practice, according to Jay Ritter, a finance professor at the University of Florida. However, high-end companies like Google Inc (NASDAQ:GOOG) and Facebook did not follow the norm enabling investors to sell off sooner. Google enabled insiders to sell shares 15 days after the IPO, whereas most of the shares were available for sale after 90 days.

Gaskins notes that Facebook comes out as the perfect example for an unsuccessful IPO launch marred by technical glitches along with share prices falling below the IPO price in the first week. Twitter might have set 181 days as lock-up period in a bid to avoid stock pressure caused by a series of unlocks. Facebook, for instance, unlocked 268 million shares in just 91 days following its IPO.

Blocking the sale of shares in earlier days make investors more patient. “The idea of a lock up is to give confidence that insiders are not going to be dumping shares at the first opportunity,” Ritter says.

Investors concerned more on profit

Gaskins said that investors are more concerned with the strategy that Twitter is adopting to bring profitability in the company rather than evaluating and worrying about the lock up. Twitter Inc (NYSE:TWTR) will have to post a quarter profitable if it wants to retain the investors’ confidence and justify around $30 billion market value.