The first SpaceX lockup expiry on August 6 allowed employees and early investors to sell shares for the first time since the company’s June stock market debut. More than 900 million shares became available to trade, roughly doubling the number already on the market, and the event is the first of several that will test investor appetite for the stock over the coming year.
A lockup is a standard agreement in an initial public offering (IPO) that stops insiders from selling their shares for a set period after the listing. It is meant to prevent a flood of shares from hitting the market while the stock is new.
An unusual, staggered schedule
SpaceX’s lockup is unusual because the banks that managed the IPO spread the releases over nearly a year instead of freeing billions of shares on a single day, Reuters reported. In the first release, up to 912 million of SpaceX’s roughly 13.6 billion outstanding shares became eligible for sale. If a price-based early-release provision is triggered, the public float, meaning the shares available for trading, could more than triple. By the middle of next year, an additional 12.9 billion shares will be freed.
Not everyone can sell yet. Elon Musk, who owns about 42% of the company, is barred from selling until one year after the IPO. SpaceX’s executive officers are subject to longer lockups that generally do not begin to expire until after fourth-quarter results.
Big gains, strong temptation
SpaceX listed in June at $135 per share, and shares jumped as high as $225, briefly making Musk a trillionaire. Many insiders bought their stakes years earlier at a fraction of that price. They are “sitting on such massive gains that they’ll have a very strong incentive to realize a return and diversify their holdings,” said Matt Kennedy, senior strategist at Renaissance Capital.
“This has to be the most talked-about lockup in the history of IPO lockups,” said Robert Hackel, chief executive of the brokerage R.F. Lafferty & Co. He said pre-IPO investors had called him wanting to sell some SpaceX shares to buy privately traded stock in other expected IPO candidates, such as Anthropic, OpenAI and the defence technology company Anduril.
Strong results, falling shares
The stock was under pressure before the release. SpaceX’s second-quarter revenue rose more than 90% to $7.8 billion, and its loss of $541 million was less than half what analysts had expected, the Associated Press reported. Chief executive Bret Johnsen said the company was on track for annualised revenue of $100 billion by the end of the year. Yet shares kept falling. Before the lockup expired, they had slumped 49% from their June high, and on August 5 they dropped nearly 14%, according to the AP, one of the stock’s biggest falls so far.
Analysts linked part of the selling to the lockup. “The selloff seems more sentiment driven, as media reports are that many insiders will look to sell on the strong results this week,” said Brian Mulberry of Zacks Investment Management. Investors were also nervous about the company’s sharp increase in spending on research and infrastructure, particularly for artificial intelligence, a concern that is weighing on many technology stocks as AI capital spending grows.
What happened on the day
When the shares were released, the stock rose instead of falling. SpaceX closed up 6.1% at $114.92 on August 6, still below its IPO price. Morgan Stanley analyst Adam Jonas said the lockup expiry was an opportunity for new investors to buy cheaply and that the stock could reach $300 by the middle of next year. Morgan Stanley was one of the banks that earned fees taking SpaceX public.
Some advisers who talk to SpaceX employees said many did not appear eager to sell. “They’re long-term believers in SpaceX,” said Gabriel Shahin, founder of Falcon Wealth Planning. But he expects each future release date to make trading more turbulent.
Why it matters for investors
For investors, the important signal will be who sells, not just how much. A large sale by an early backer, such as Founders Fund, Craft Ventures, Antonio Gracias’s Valor Equity or Alphabet, would say more about confidence in SpaceX than routine selling by employees diversifying their savings. Each later release will add more shares to the market, so volatility is likely to stay high until the schedule ends in mid-2027.
Our take
SpaceX’s staggered lockup was a smart way to avoid one huge selling day, but it also means the stock faces a series of tests rather than one. The first went better than feared, which suggests that much of the expected selling had already been priced in. The company’s growth is real; the question is whether investors will pay a high price for it while SpaceX spends heavily on AI and insiders keep gaining the right to sell.