Shares of Snap, owner of the Snapchat messaging app, had their busiest trading day in two and a half months in a volatile session in the US last night, as early investors could sell their shares for the first time since its March market debut.

The stock pared losses to close down 1% at $13.67, after falling as much as 5.1% and hitting a fresh record low following the expiration of a trading lock-up.

Trading volume was 2.9 times the company's ten-day moving average with more than 48.8m shares changing hands after a trading restriction was lifted for early shareholders.

Employees will have to wait two more weeks before selling their shares in Snap, whose $3.4 billion IPO was the third-largest for a US technology company.

The shares swung between positive and negative territory yesterday, hitting a high of $13.98 and a low of $13.10.

It ended the day about 54% below its 3 March intra-day peak as investors have fled on concerns about its growth prospects.

Many investors positioned themselves ahead of the expiration, at least partly explaining Snap's 23% drop for the month of July, according to traders and analysts.

"If people are placing negative bets or were trying to liquidate, in both cases, you'd want to have done it before today," said Andrew Frankel, co-president of Stuart Frankel & Co in New York.

"It's down certainly because the lockup has expired. It's not down 5% because it's not new news."

Yesterday’s move likely showed bargain hunting and continued hope from early investors, said Morningstar analyst Ali Mogharabi who rates the stock, which debuted at $17, as "neutral" and sees a $16 per share price as a fair valuation.

Snap has been popular among short sellers and the roughly 66m shares sold short on Friday were largely unchanged yesterday, according to research firm S3 Partners.

As of yesterday, investors including Lightspeed Venture Partners could sell up to 400m shares, with employees owning another 782m that can start selling on 14 August, four days after Snap reports results, JPMorgan analyst Doug Anmuth said in a recent note.

Lock-ups can prompt dramatic price moves. For example, Twitter shares fell 18% after a key lock-up expiry in 2014, and in 2012, Facebook rose 13% on its lock-up expiry.

Snap did not respond to a request for comment.