SpaceX Lockup Expiration Triggers 12% Rally Instead of Selloff

A Lockup That Didn't Break the Stock

For weeks, SpaceX's first lockup expiration was treated as a test of whether the largest IPO ever could hold up once insiders were allowed to sell. The selloff that many traders expected didn't happen. On August 6, 911.5 million shares held by employees and early investors became eligible for sale for the first time since the June listing. Instead of falling, the stock rose15. Shares recovered 4% on the day of the unlock, then gained more than 11% on Friday, August 7, trading near $1285. By the week ending Monday, August 10, the stock was up 21.1%. It closed above its $135 IPO price for the first time in almost a month1.

The price path in that first week was messier than the 12% figure suggests. SpaceX opened August 6 near a record low of about $105, then reversed and finished the session up roughly 6%9. Measured from the low of the lockup week, the stock rallied more than 26% before briefly reclaiming $1359. Reports differ a little on the size of each day's move. They all agree on the direction: the first unlock was followed by a rebound, not a collapse.

That result holds up. The rest of the story shows that the first unlock was the easy test, and that the later tranches have been less kind to the stock.

How SpaceX Set Up Its IPO

The lockup matters because of how unusual the offering was. SpaceX sold 555.6 million shares at a fixed $135 and raised about $75 billion1319. The company did not use a price range to measure demand and did not negotiate with prospective buyers. It set the price on a take-it-or-leave-it basis1820. Underwriters also had an option to buy another 83.3 million shares, which could lift total proceeds toward $86 billion15. That likely explains why some reports put the raise at $85.7 billion and others at $75 billion611.

Reported valuations range from $1.75 trillion to $1.8 trillion, with most sources using roughly $1.77 trillion111517. The bigger point is that SpaceX sold only about 4% of the company and used that sale to price the other 96%15. The public float was around 5%, well below the 10% normally expected for a listing, and SpaceX received a waiver to proceed16.

Retail investors got an unusually large share. The company aimed to allocate about 30% of the offering to individuals, against a typical 5% to 10%20. The actual retail share was reportedly cut closer to 20% just before pricing19. On the first day, the stock opened at $150, reached $176.52 and closed at $160.95, up 19.2%19. That put SpaceX's market value above $2 trillion and briefly made Musk the world's first trillionaire18.

The structure produced exactly what critics predicted. A small float, an accelerated path into the Nasdaq-100 and broad underwriter support pushed the price up quickly19. The shares peaked at $225.64 within days11. The same structure meant a much larger supply of insider stock was waiting to come onto the market later.

Why the Selling Didn't Materialize

By late July the stock had fallen nearly 50% from its high and traded well below the IPO price6. Short sellers held almost $25 billion of SpaceX stock, about 34% of the float. That made it the most shorted U.S. stock over the prior 30 days, according to S3 Partners data6. The first unlock was set to more than double the tradable supply, lifting the float from under 5% to more than 12%6.

Three explanations come up across the coverage, and they work together.

The selling may have happened before the unlock. Morningstar's Nicolas Owens argued that much of the summer slump came from investors anticipating the dilution35. In that view, the bad news was largely priced in by the time the shares were released.

The earnings report mattered more than the share supply. SpaceX's first report as a public company, on August 4, showed revenue of $7.8 billion, up 92% from a year earlier. Its net loss was $541 million, far smaller than the roughly $1.9 billion analysts had expected9. Argus then upgraded the stock to Buy with a $160 target, citing early returns on the company's AI infrastructure spending5.

An extra unlock never happened. A provision would have released another 10% of restricted shares if the stock traded at least 30% above the IPO price on five of the ten trading days before earnings110. The summer decline kept the price below that level, so roughly 455.8 million additional shares stayed locked10. The weak stock price ended up limiting the supply that could have pushed it lower.

Heavy short interest likely added to the rebound. With about a third of the float sold short, a sustained rise could force short sellers to buy back shares3. Options trading also tilted toward bullish bets, with call contracts outnumbering puts more than two to one heading into the August 7 expiration5. Taken together, the first unlock was a short-covering and earnings-driven rally that happened to coincide with the lockup expiring. It was not proof that the supply of insider stock no longer mattered.

Analysts remained divided. Morgan Stanley's Adam Jonas called the unlock a buying opportunity. Bank of America's Ron Epstein warned that the added supply would weigh on the shares in the near term3.

What Happened After the First Unlock

Later results support Epstein's caution more than the August headlines did. The first rally turned out to be the exception9. After the August 6 release, each smaller time-based unlock was followed by declines:

• August 20 (day 70): about 319 million shares released; the stock fell about 4%9.
• September 9 (day 90): up to 319 million shares released; the stock fell 3.9% to $147.559.
• September 24 (day 105): up to 328.4 million shares released; the stock fell about 4% the session before9.

The declines were orderly rather than severe. By early October, the float had grown to about 33% of outstanding shares, up from roughly 7.5% at the IPO, while the stock traded in a fairly narrow range8. Nancy Tengler of Laffer Tengler, who owns SpaceX shares, said the steadiness suggests many insiders are choosing to keep their stock rather than sell8. Morgan Stanley's Jonas noted that the forward price-to-earnings multiple had fallen to 111 from more than 540 in July8. Around October 5, the shares traded near $165, giving SpaceX a market value of roughly $2 trillion12.

There are also signs of stress. A recent two-day drop of 6.6% pushed the price of five-year credit default swaps on SpaceX's debt to a new high8. Rising CDS prices mean it costs more to insure against default, so credit markets are not as calm as the stock price suggests.

Did Musk Come Through Unscathed?

Mostly, yes. Musk's net worth briefly passed $1 trillion after the IPO and had fallen to $853.3 billion by August 10 as the stock traded below its peak1. In practical terms he did not have to worry about the summer unlocks. His roughly 6.4 billion shares are locked for 366 days, until June 12, 2027, with no early-release provisions710.

Reports on Musk's control differ. Several sources from the IPO period put his voting power at about 82% through super-voting Class B shares1516. A more recent summary of filings put it at 48.4% as of October17. That gap is significant and has not been explained in the coverage, so it is unclear whether his voting position actually changed after the IPO. Either way, shareholders who bought into the offering acquired an economic stake with limited influence over company decisions15.

What Comes Next

The unlocks are not finished. The day-120 tranche was due on October 9, and another release of up to 328.4 million shares follows on October 249. The bigger test comes after third-quarter earnings, expected in November: up to about 1.3 billion shares, the largest single tranche68. The full 180-day lockup ends December 8, releasing roughly 800 million remaining shares79. Musk's stake of more than 6 billion shares follows in June 20279.

Valuation remains a central question. Morningstar's fair-value estimate is $780 billion, or $63 per share19. Aswath Damodaran valued the company at about $1.3 trillion16. Both are well below the current market price. Much of the bullish case depends on xAI, which accounts for most of the $28.5 trillion addressable market SpaceX described in its prospectus16.

The August rally showed that a well-telegraphed lockup does not have to cause a crash, especially when good earnings and heavy short interest push the other way. It did not show that SpaceX can absorb unlimited supply. The 1.3-billion-share tranche after November earnings will be the more meaningful test. Its outcome is also likely to influence how investors approach possible IPOs from OpenAI and Anthropic6.