SpaceX’s insider share unlocks could pressure retail investors, The Motley Fool says

SpaceX’s record-setting debut

The Motley Fool reports that on June 12, Elon Musk’s Space Exploration Technologies, or SpaceX, set new Wall Street records with its initial public offering. The company raised $85.7 billion including the underwriters’ overallotment, which the article says was almost three times the prior record set by Saudi Aramco. It also says SpaceX began with a $1.77 trillion initial valuation, the largest ever, although Anthropic could soon exceed that figure.

Retail enthusiasm and the company’s market pitch

The article says SpaceX has described its addressable market as $28.5 trillion, and that much of that estimate is tied to its artificial intelligence ambitions. The Motley Fool says this, along with Elon Musk’s track record of growing Tesla into a trillion-dollar company, has helped fuel retail investor excitement.

A staggered insider unlock schedule

The Motley Fool says SpaceX did not follow the usual public-company lockup approach. Instead of a standard 180-day insider lockup, it disclosed a staggered and accelerated share-unlock plan in its prospectus. The article defines insiders as high-ranking executives, board members, or beneficial owners with at least 10% of a company’s shares. It says such lockups are usually meant to prevent insiders from selling into retail enthusiasm soon after an IPO.

The article says Musk, who owns a majority of SpaceX’s outstanding shares, is not allowed to sell shares for 366 calendar days after the company’s debut. But it says the rules are different for other insiders who qualify for early release. According to the article, about 911.5 million shares became eligible for insider sale on the second day after SpaceX’s first quarterly report as a public company, and the same amount will become eligible two trading days after the next quarterly report.

More unlock dates and a small public float

The Motley Fool reports that additional time-based unlocks are set for calendar days 70, 90, 105, 120, 135, and 180. Because day 135 falls on a weekend, the article says Oct. 26 will unlock another 319 million shares for sale by early-release-eligible insiders.

The article also says SpaceX’s public float is unusually small. It notes that companies typically sell 10% to 25% of their outstanding shares in an IPO, while SpaceX offered about 555.6 million shares, which the article says was less than 5% of its outstanding shares.

Possible pressure from future selling

According to The Motley Fool, the small float helped SpaceX shortly after listing because fast-track inclusion in the Nasdaq-100, Russell 1000, and Russell 3000 led passive funds to buy the stock and support its price. The article says later unlock events could instead increase the number of shares available and put pressure on retail investors. It adds that not every eligible insider will sell, but says many have had few chances to realize gains for years. The article closes by saying this could amount to one of Wall Street’s biggest wealth transfers, and that the transfer would be from retail investors to SpaceX insiders.