The largest planned IPO on record will not have the typical 180-day lockup for existing investors. SpaceX has built a tiered, rolling release schedule designed to meter—not block—sales by its longest-tenured shareholders. Analysts say the goal is to spread out the selling from pre-IPO shareholders, whereas the traditional process can produce a wave of shares hitting the market all at once.
While the approach is mainly aimed at tempering stock price volatility, staggered lockups have not always kept a hot, newly listed stock’s price high. For example, by the end of Facebook’s 2012 IPO lockup, shares had fallen more than 40% from their offering price (they went on to recover).
Moreover, SpaceX will be the first mega-IPO to qualify for the Nasdaq 100’s new fast-entry rule, letting it join the index after only 15 days of trading. This will force passive index funds tracking the benchmark to buy shares, and experts anticipate it will put even more upward pressure on SpaceX’s stock.
“It’s going to attract larger institutional investors, as well as index funds, sooner than it would with any IPO of this nature,” says Jawad Hussain, senior managing partner of advisory firm Highspring. “Well, I can’t say ‘this nature’ because no such things exist in the market … because of the size and sheer scale of this, they really need all of these accelerants for the stock to perform” after the IPO.
As outlined in the company’s IPO prospectus, SpaceX investors will be able to sell up to 20% of their stock starting on the second full day of trading after the company releases its first earnings report after the end of the second quarter. There’s also a performance-based trigger; investors can sell an additional 10% if the stock trades 30% above its IPO price for at least five of the 10 trading days leading up to when earnings are released.
There’s a layered lockup structure in place too, irrespective of where the stock is trading. Investors can sell in increments of 7% after 70, 90, 105, 120, and 135 days following the public listing. An additional 28% unlocks after SpaceX reports its third-quarter earnings. The remainder unlocks at 180 days post-IPO.
Elon Musk, who controls 85.1% of voting power in his company, is sitting out the sale for quite a bit. He and unnamed “certain significant investors” have agreed to a 366-day lockup period, per the IPO filing.
“I don’t know if any of the largest [investors] would want to sell. The fact that they’re allowing up to 20% gives them some liquidity,” explains Mike Alves, founder of VIDA Vision Fund and an investor in SpaceX and xAI. “That said, they have been long-term investors, and there’s a huge gain to that position, so I’m sure they want to take some off the table.”
