On June 12, Elon Musk’s artificial intelligence (AI) and space infrastructure goliath, Space Exploration Technologies (SpaceX) (SPCX -2.57%), rewrote Wall Street’s record books. It practically tripled the largest-ever cash raise from an initial public offering (IPO), $85.7 billion, including the underwriters’ overallotment, and vaulted to a nearly $3 trillion market cap within days after its debut.

But the sledding has been considerably more challenging for SpaceX in the months since its IPO. On a peak-to-trough basis, SpaceX retraced 55% from its all-time intra-day high, which is right in line with the average maximum year-one drawdown for high-profile, technology-driven IPOs over the last 14 years.

A twenty dollar bill paper airplane that's crashed and crumpled into a financial newspaper.

Image source: Getty Images.

The problem for SpaceX and its shareholders is that this bumpy ride may just be starting, courtesy of its accelerated share unlock schedule.

Nearly $47 billion in potential selling pressure is waiting in the wings

Typically, when a company goes public, it establishes a 180-day share lockup period for its insiders (high-ranking executives, board members, and early investors). During this period, insiders are prevented from selling their shares and taking advantage of early IPO buzz.

Musk’s company didn’t stick to tradition. Its mile-long prospectus outlined a staggered and accelerated share unlock schedule over the first six months after its debut.

On Aug. 6, just two days after the release of SpaceX’s first quarterly report, a whopping 911.5 million early release-eligible insider shares were authorized to be sold. SpaceX established several event- and time-based milestones that allow these early release-eligible insiders to dump their shares on retail investors.

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Today, Aug. 20, marks the next share unlock milestone for early release-eligible insiders. Approximately 319 million shares can potentially be sold on the 70th calendar day after the company’s IPO. Based on SpaceX’s closing price on Aug. 17, this translates into nearly $47 billion in potential selling pressure hitting the tape.

Less than three weeks from now, on the 90th calendar day post-IPO, another 319 million shares can be sold by eligible insiders. Unlock periods shorten thereafter to just 15 calendar days, with 319 million share blocks becoming available on days 105, 120, and 135.

An expanding exhaust plume coming from a rocket lifting off from a launchpad.

Image source: Getty Images.

But wait — there’s more

What makes this insider unlock schedule so dramatic and noteworthy, aside from the company’s nosebleed valuation, is that SpaceX didn’t sell many shares at its IPO. Companies going public often sell between 10% and 25% of their outstanding shares. Despite SpaceX selling approximately 555.6 million shares, this represents less than 5% of its outstanding shares.

In other words, as each new share unlock milestone is reached, the company’s float (i.e., tradable shares) can dramatically increase. While a small float buoyed SpaceX’s shares when it gained fast-track entry into the Nasdaq-100, Russell 1000, and Russell 3000, a deluge of available shares, courtesy of eligible insider selling, can have the opposite effect.

While this potential fleecing of retail investors could remain problematic through mid-December, the bigger issue is that SpaceX has yet to prove it can meet otherworldly expectations.

Musk’s AI and space titan is trading at 43 times estimated 2026 sales, and history shows that no company at the forefront of a game-changing technology (let alone two) has been able to sustain a price-to-sales ratio above 30 for any extended period. SpaceX is also losing money and burning quite a bit of cash, courtesy of its AI data center expansion.

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In other words, caveat emptor, current and prospective SpaceX investors.




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