NEW YORK (Reuters) - Shares of Snap Inc SNAP.N, owner of the Snapchat messaging app, had their busiest trading day in two and a half months in a volatile session on Monday, as early investors could sell their shares for the first time since its March market debut.

FILE PHOTO - A woman stands in front of the logo of Snap Inc. on the floor of the New York Stock Exchange (NYSE) while waiting for Snap Inc. to post their IPO, in New York City, New York, U.S. on March 2, 2017. REUTERS/Lucas Jackson/File Photo

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

Trading volume was 2.9 times the company’s 10-day moving average with more than 48.8 million 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 U.S. technology company.

The shares swung between positive and negative territory Monday, hitting a high of $13.98 and a low of $13.10. It ended the day about 54 percent below its March 3 intraday 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 percent 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 percent because it’s not new news.”

Monday’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 66 million shares sold short on Friday was largely unchanged on Monday, according to research firm S3 Partners.

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

Lockups can prompt dramatic price moves. For example, Twitter Inc TWTR.N shares fell 18 percent after a key lockup expiry in 2014, and in 2012, Facebook Inc FB.O rose 13 percent on its lockup expiry.

Snap did not respond to a request for comment.