The shares tumbled as much as 5.1% to $13.10 in New York, 23% below the company's $17 IPO price.
Inside holders, such as executives and investors from the company's days as a private startup, are barred from selling their shares for a certain period after the IPO. JPMorgan Chase & Co. had estimated that as many as 400 million shares could be sold in the first lockup expiration.
While some early investors are finally able to cash out on their holdings, putting more stock into the market also puts pressure on the price. Snap, the maker of the Snapchat app for sending fun, disappearing photos and videos, has already seen its value decline since the IPO. Investors have voiced concerns that Snap won't be able to grow its user base quickly enough to claim a strong position in an increasingly competitive digital advertising market, especially as Facebook's properties copy some of Snapchat's most compelling features.
"Sentiment around Snap remains at ghastly levels," Brian White, an analyst at Drexel Hamilton, wrote in a note to investors this month. But once all the lockups have expired, the weakened stock could be "a buying opportunity for investors that can look out 12 months," he said.
Snap reports earnings for the second time as a listed company on August 10.