Early investors in SpaceX are poised to have their first opportunity to liquidate a portion of their holdings this Thursday, as initial lockup restrictions expire. This event could introduce downward pressure on the company’s stock, which has already seen a significant decline of over 50% from its mid-June peak.
A substantial volume of more than 911 million SpaceX shares will become available for trading, representing approximately 7% of the company’s total outstanding shares. This figure surpasses the 639 million shares that were initially offered during the company’s record-breaking initial public offering.
Elon Musk’s revolutionary reusable rocket venture experienced an immediate surge in its stock price following its Nasdaq debut in June, reaching $150 before climbing above $225 within days. However, the subsequent eight weeks have proven volatile, with the shares closing at a low of $108.27 on Wednesday. This downturn was largely attributed to SpaceX’s first earnings report, released late Tuesday, which revealed that capital expenditures were more than double its revenue, a finding that clearly concerned investors.
Greg Martin, co-founder of Rainmaker Securities, commented via email that the stock’s “near-term path” is likely to be more influenced by the lifting of lockup restrictions than by any underlying fundamentals or strategic developments. This sentiment underscores the market’s sensitivity to supply-side dynamics in the immediate aftermath of an IPO.
The unlocking of shares is a phased process, with additional tranches set to become available. On August 20, another 319 million shares could be unlocked, followed by approximately 700 million in September and a similar number in October, according to the company’s prospectus. This staggered release strategy aims to mitigate the immediate impact of a massive influx of shares onto the market.
Elon Musk, the world’s wealthiest individual, remains the most significant SpaceX shareholder with over 6 billion shares. His holdings, however, are subject to a lockup period extending until June 2027, indicating his continued long-term commitment to the company’s vision.
Regarding the upcoming initial batch of unlocked shares, analysts at Mizuho observed in a report that “While the step-up in potential supply is meaningful, we think investors should understand that shares becoming eligible for sale does not mean the full tranche will be offered into the market.” This suggests that a portion of these shares may be held back by early investors, potentially moderating the immediate selling pressure.
Among those looking to realize gains from their early investment is Jessie Bates III, a safety for the Atlanta Falcons. Bates, 29, acquired his shares in 2022 at a valuation of $127 billion, investing approximately $150,000. With SpaceX currently valued at $1.43 trillion, Bates’ stake is potentially worth over $1.5 million. In a statement released through his publicist, Bates indicated his intention to sell all of his shares to “lock in gains,” a prudent move for many early-stage investors seeking to de-risk their portfolios.
Michael Ledo, CEO of RISE Family Office, manages Bates’ investments. RISE Family Office specializes in assisting athletes in building long-term wealth and transitioning into business leadership roles. Notably, Bates’ portfolio has also included significant stakes in other prominent pre-IPO companies such as OpenAI, Anthropic, Databricks, Cart.com, and Turo, reflecting a strategic approach to venture capital investing.
Bates indicated through his publicist that future investment in SpaceX would likely be contingent on strategic acquisitions that could unlock new growth avenues. This aligns with SpaceX’s recent strategic moves, including its February merger with Musk’s xAI, which valued the combined entity at $1.25 trillion. Furthermore, prior to its IPO, SpaceX agreed to acquire Cursor for $60 billion, a transaction anticipated to close this quarter. These acquisitions signal SpaceX’s ambition to expand its technological footprint and diversify its revenue streams beyond its core launch services.
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