Early investors in SpaceX are set to receive their first opportunity to sell a portion of their holdings on Thursday as the company’s initial IPO lockup restrictions expire, creating a potentially significant test for a stock that has already lost more than half of its value from its post-listing peak.
More than 911 million SpaceX shares will become eligible for trading, representing roughly 7% of the company’s outstanding shares. The amount is substantially larger than the 639 million shares sold during SpaceX’s record-breaking initial public offering, raising concerns that the increase in available supply could put additional pressure on the stock.
The development comes after a turbulent first two months on the public market for Elon Musk’s reusable rocket company.
From IPO Euphoria to Sharp Pullback
SpaceX debuted on the Nasdaq in June to enormous investor enthusiasm.
The shares quickly surged to $150 on their first day of trading and then climbed above $225 within days, briefly making the company one of the market’s hottest newly listed technology stocks.
However, the momentum has reversed sharply. Shares closed on Wednesday at $108.27, leaving the stock more than 50% below its mid-June high.
The sell-off intensified after SpaceX reported its first quarterly earnings as a public company on Tuesday. Investors were surprised by the scale of the company’s spending, with capital expenditures running at more than twice the level of revenue, highlighting the enormous investment required to expand its launch, satellite, and artificial intelligence infrastructure businesses.
Lockup Expiration Could Drive Near-Term Trading
Market participants are now watching the lockup expiration more closely than the company’s operational performance.
Greg Martin, co-founder of Rainmaker Securities, said the stock’s “near-term path” may be influenced more by the lockup expiration than by fundamentals or long-term strategy.
Lockup periods are designed to prevent insiders and early investors from immediately selling shares after an IPO. Once those restrictions expire, the sudden increase in potential supply can create short-term downward pressure, particularly when a stock has already experienced significant volatility.
Importantly, Thursday’s unlock is only the beginning.
According to SpaceX’s prospectus:
- 319 million additional shares could become eligible for sale on August 20,
- roughly 700 million shares could unlock in September,
- and another similarly sized tranche may become available in October.
That means investors may face several months of elevated supply risk rather than a single one-day event.
Elon Musk’s Stake Remains Locked Up
Despite the large number of shares becoming eligible for trading, Elon Musk’s holdings will remain restricted.
Musk owns more than 6 billion SpaceX shares, making him by far the company’s largest shareholder. Those shares are locked up until June 2027, meaning the current unlock primarily affects early venture investors, employees, and other pre-IPO shareholders rather than Musk himself.
That distinction is important because it limits the risk of a massive insider sale from the company’s founder, which could have had a much larger psychological impact on the market.
Analysts Say Not All Shares Will Hit the Market
Some analysts have urged caution against assuming that the entire 911 million-share tranche will be sold immediately.
In a report published Wednesday, Mizuho analysts noted that shares becoming eligible for sale does not mean all of them will necessarily be offered into the market.
Many early investors may choose to:
- continue holding for potential long-term upside,
- sell only a portion of their position,
- or use the newly liquid shares as collateral rather than exiting completely.
The actual impact will therefore depend on how many shareholders decide to take profits and how much demand exists from new investors willing to buy the additional float.
An NFL Player Plans to Cash Out
One investor who has publicly indicated an intention to sell is Jessie Bates III, the Atlanta Falcons safety.
Bates said he invested approximately $150,000 in SpaceX in 2022, when the company was valued at about $127 billion. With SpaceX now carrying an estimated $1.43 trillion valuation, his stake could be worth more than $1.5 million.
In a statement provided through his publicist, Bates said he intends to sell all of his SpaceX shares in order to “lock in gains.”
His investments are managed by Michael Ledo, CEO of RISE Family Office, which focuses on helping professional athletes build long-term wealth. Ledo said Bates’ portfolio has also included stakes in high-profile private companies such as OpenAI, Anthropic, Databricks, Cart.com, and Turo.
The decision illustrates how some early investors may view the lockup expiration as an opportunity to realize substantial gains after SpaceX’s dramatic valuation increase over the past several years.
Strategic Deals Could Shape Future Sentiment
Although Bates plans to exit, he suggested that future strategic acquisitions could make him interested in investing again.
SpaceX has recently taken several significant corporate actions that have expanded its ambitions beyond traditional space launches.
Earlier this year, the company merged with Musk’s artificial intelligence startup xAI in a transaction that valued the combined entity at approximately $1.25 trillion. Before the IPO, SpaceX also agreed to acquire Cursor for $60 billion, with the deal expected to close later this quarter.
Those transactions have fueled speculation that SpaceX is evolving into a broader space, communications, and AI infrastructure company rather than remaining solely a rocket manufacturer.
Investors Focus on Cash Burn and Growth Spending
The lockup expiration is occurring against the backdrop of growing debate about SpaceX’s financial profile.
While the company remains a leader in reusable rockets and satellite communications through Starlink, its latest earnings report highlighted the enormous capital requirements associated with:
- expanding Starlink’s global satellite constellation,
- developing next-generation Starship launch systems,
- building AI-related computing infrastructure,
- and integrating newly acquired businesses.
The fact that capital expenditures exceeded revenue by more than two times has raised questions about how quickly SpaceX can translate its technological leadership into sustained public-market profitability.
For growth-oriented investors, the spending may be viewed as necessary to secure dominant positions in space transportation, broadband, and AI infrastructure. More cautious investors, however, may worry that the company’s valuation already assumes years of exceptionally rapid growth and successful execution.
A Critical Test for the Newly Public SpaceX
Thursday’s lockup expiration represents the first major supply-and-demand test for SpaceX as a publicly traded company.
The stock is entering the event from a position of weakness:
- shares have fallen sharply from their highs,
- investors are digesting a surprisingly heavy spending profile,
- and several additional unlocks are scheduled over the next few months.
At the same time, SpaceX remains one of the world’s most closely watched technology companies, with leading positions in space launches, satellite internet, and emerging AI infrastructure opportunities.
The key question is whether new institutional and retail demand will be strong enough to absorb the increased supply of shares coming to market.
If selling pressure proves limited, investors may interpret that as a sign of continued confidence in SpaceX’s long-term growth story. But if a significant number of early shareholders choose to follow investors like Jessie Bates III and realize their gains, the stock could face continued volatility as the market works through one of the largest post-IPO unlock schedules in recent memory.
Source: SpaceX IPO prospectus, company earnings report, market data, and public statements from investors and analysts
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