The Impending Lock-Up Expiry for Chagee Holdings: Strategic Entry Opportunity or Selling Pressure Catalyst?

The lock-up expiry for Chagee Holdings Limited (NASDAQ: CHA) on October 14, 2025, represents a pivotal moment for the stock, with significant implications for market liquidity and investor positioning, according to a MarketBeat alert. As the company's restricted shares-issued during its April 2025 IPO-become eligible for trading, the market faces a dual-edged scenario: a potential influx of selling pressure or a catalyst for strategic entry by long-term investors.

Market Liquidity Dynamics: A Double-Edged Sword

Chagee's IPO in April 2025 raised $411 million by issuing 14.68 million shares at $28.00 per share; an over-allotment exercise added 2.2 million American Depositary Shares (ADSs). As of October 2025, the company has 168.59 million shares outstanding, per the company's historical price lookup. The expiration of the lock-up period now unlocks approximately 14.68 million previously restricted shares, held by insiders and major shareholders. Analysts estimate that around 2 million shares could be dumped into the market between October 14 and 17, 2025, unless large institutional investors absorb the volume.

This sudden increase in supply could strain liquidity, particularly if demand from buyers does not keep pace. Historical precedents suggest that lock-up expiries often trigger short-term volatility, as sellers prioritize liquidity over price stability. However, if institutional buyers or long-term investors step in to purchase these shares, the influx could instead enhance market depth and stabilize the stock.

Investor Positioning: Short Interest and Sentiment

Short interest in Chagee Holdings as of September 15, 2025, stood at 2.61 million shares, with a days-to-cover ratio of 1.92, based on an average daily trading volume of 1.36 million shares, according to TheOnlineInvestor. This suggests that short sellers are moderately exposed to upward price movements, which could amplify volatility if the stock rallies post-expiry. Conversely, a sharp decline in price-driven by heavy selling-might force short sellers to cover positions, potentially creating a self-correcting mechanism.

The stock's recent performance underscores its volatility. Between August 25 and 27, 2025, CHA fluctuated between $22.13 and $23.00, closing at $16.74 in the overnight session on October 14, according to the company's investor data. This decline coincided with a disappointing earnings report on August 29, 2025, which missed revenue and earnings per share expectations. Such fundamentals may embolden short sellers but could also attract bargain hunters if the stock corrects meaningfully.

Analyst Outlook: Mixed Signals for Investors

Despite the uncertainty, analysts remain divided. Chagee holds a "Moderate Buy" consensus rating, with a target price of $36.44, according to MarketBeat. Deutsche Bank's $40.50 price target reflects optimism about the company's long-term growth, while Macquarie's "Neutral" rating and $19.00 target highlight caution. This divergence underscores the stock's potential for both upside and downside, depending on how the lock-up expiry unfolds.

Strategic Implications for Investors

For long-term investors, the lock-up expiry could present a discounted entry point if selling pressure drives the stock below its intrinsic value. However, the risk of further declines-particularly in a weak macroeconomic environment-cannot be ignored. Short-term traders, meanwhile, may capitalize on the expected volatility, hedging against directional bets with options or diversified portfolios.

Conclusion

The lock-up expiry for Chagee Holdings is a critical inflection point, with outcomes hinging on liquidity absorption and investor sentiment. While the risk of selling pressure is real, the event also offers opportunities for disciplined investors to assess value. As the market navigates this transition, close monitoring of trading volume, short interest, and institutional activity will be essential to gauge the stock's trajectory.