Overhang

See: Insider Trading. See: 144a.

When a stock has overhang, it usually means that there are a bunch of insiders waiting to sell shares to pay off car loans, pay divorce settlements, and buy shiny things. The process of getting liquid after an IPO or a merger or acquisition usually runs such that insiders with big overhanging blocks of stock to sell to the public must wait 6-ish months before they can do so. Things cool down. Information flows then broadly. Facts are obtained. And then shiny things are bought after the sale.

While there's an overhang, the stock price usually remains below where it "should" be trading, as investors are wary about massive supply of shares hitting a demand volume that is flat and then hammering prices.

See: Overhanging Supply.