Stock overhang is a phrase used to describe a sizeable block of shares (or, for that matter, of securities, commodities, contracts, and so on) which, if it were to be released in the market in one go, would flood it, and so put downward pressure on prices.
For example, if an institutional investor is known to be trying to offload a large holding, it is said to be overhanging the market. This will tend to depress the share price of the company concerned until all the stock has been sold.
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