SpaceX Lockup Expiry Threatens to Flood Market With $123 Billion in Shares
SpaceX’s upcoming lockup expirations will unleash a massive wave of newly tradeable shares, testing the valuation of the $2.1 trillion company and challenging investor appetite amid a steep revenue multiple.
SpaceX is preparing for a major shift in its shareholder structure as lockup restrictions begin to lift in the coming months. The expiration will allow insiders, employees, and early investors to sell shares that have been restricted since the company’s historic initial public offering.
The first wave of eligible shares is substantial. Rank-and-file employees and select early investors will be free to sell 911.5 million shares starting on the second trading day after the company’s debut quarterly report, which analysts expect in early August.
These newly eligible shares are currently valued at approximately $123 billion. This volume eclipses the $86 billion worth of shares currently available for trading on the Nasdaq, raising the prospect of significant downward pressure on the stock price.
Additional selling pressure could materialize based on stock performance. An extra 455.8 million shares will become eligible for sale if the stock price remains above $175.50 for at least five of the 10 consecutive trading days leading up to the quarterly report.
By December 8, the cumulative lifting of these restrictions will expand SpaceX’s tradeable float to 40 percent of the company. The remaining 60 percent, which includes Elon Musk’s stake, will stay locked until mid-2027.
The impending supply increase arrives while the stock carries a steep premium. Following a recent selloff, the company trades at 49 times its expected revenue, a stark contrast to another Musk-backed investor favorite, Tesla, which recently traded at a revenue multiple of 15.
Despite reporting a net loss of nearly $5 billion last year, bullish market participants argue the valuation is justified. Supporters point to the profitability of the Starlink internet service, a robust government rocket launch portfolio, and strong investor loyalty to Musk.
Market sentiment remains overwhelmingly positive on paper. According to LSEG data, 27 of the 32 analysts covering the stock recommend buying, while only one advises selling and four maintain a neutral stance.
However, historical IPO data suggests caution for investors navigating early volatility. An analysis of 50 high-profile US IPOs since 2010 indicates that companies dropping below their IPO price in the first two months tend to underperform their peers.
Specifically, the 21 companies that fell below their debut price in that window saw a median gain of 61 percent over time. The remaining 29 companies that held above their IPO price achieved a median gain of 112 percent.
Fund managers are adjusting their strategies to account for the shifting supply dynamics. Jay Hatfield, CEO of Infrastructure Capital Advisors in New York, noted that while the current price offers a trading opportunity, the looming lockup expiration prevents a heavier commitment.
"We think at this level, it's relatively safe to at least be involved from a trading perspective," Hatfield said. "We won't overweight it because they do have the lockup coming."
