Attention is shifting to SpaceX (NASDAQ:SPCX) as the company’s first post-IPO lock-up period expires on Thursday, allowing as many as 912 million shares owned by employees, early investors and other pre-listing stakeholders to become eligible for sale.
The event follows the company’s first earnings report as a public company and is expected to provide fresh insight into investor confidence after the stock has fallen 49% from the record high reached shortly after its June listing.
Insider sales could influence market sentiment
Many of SpaceX’s earliest investors acquired their holdings well before the initial public offering at prices far below the IPO price of $135 per share, leaving them with substantial unrealised gains.
Although profit-taking is widely anticipated, analysts believe the market will focus less on the overall volume of selling and more on which shareholders decide to reduce their positions.
“This has to be the most talked-about lockup in the history of IPO lockups,” said Robert Hackel, chief executive of institutional brokerage R.F. Lafferty & Co.
Hackel said several early investors have expressed interest in selling part of their SpaceX holdings in order to reinvest in privately held companies expected to pursue future public listings, including Anthropic, OpenAI and defence technology company Anduril Industries.
“You are going to see a lot of exits,” he said.
Matt Kennedy, senior strategist at Renaissance Capital, said employees and early investors have a strong financial incentive to diversify their portfolios after benefiting from significant appreciation in the value of their shares.
Earnings fail to halt pressure on the stock
SpaceX shares fell 7.5% in after-hours trading on Tuesday despite reporting second-quarter revenue growth of 92%, exceeding analyst expectations.
Management also reiterated that the company remains on track to achieve an annualised revenue run rate of $100 billion before the end of the year.
According to Brian Mulberry, chief market strategist at Zacks Investment Management, the approaching lock-up expiry may have contributed to the negative market reaction.
The selloff “seems more sentiment driven, as media reports are that many insiders will look to sell on the strong results this week as their shares become fully vested,” Mulberry said.
Investors watching closely for insider activity
Lock-up agreements are standard following initial public offerings, preventing insiders from selling shares for a predetermined period.
SpaceX’s arrangement differs from most IPOs because shares will be released gradually over almost a year rather than becoming available all at once.
By the middle of next year, around 12.9 billion additional shares are expected to become eligible for trading.
Given the relatively small public float, Thursday’s release alone could more than double the number of shares available on the market. If an early-release provision tied to the share price is triggered, the public float could increase by more than three times.
“This time, it’s a multiple of the shares outstanding that will make their way onto the market, not a fraction, so these lockups will be an interesting test of the commitment of early investors to stand by the company for the long haul,” said Andrew Chanin, chief executive of Procure AM.
Lukas Muehlbauer, research associate at IPOX, said any large disposal by a prominent early shareholder could influence investor confidence in SpaceX’s long-term outlook.
However, Falcon Wealth Planning founder Gabriel Shahin said conversations with employees and insiders suggest many continue to believe strongly in the company’s future.
“They’re long-term believers in SpaceX, and as a result we tend to be more bullish on insiders also not selling and what that says about the stock,” he said.
Even so, Shahin expects each upcoming lock-up expiry date to increase share price volatility, noting that elevated options prices have already made hedging positions unusually expensive.
SpaceX stock price
