When SpaceX went public earlier this year, it had a rocket-launch-like trajectory that looked like it was going straight up. Since those first few days of “to the moon” hype, though, its stock price has come crashing down to Earth. Now it might be at risk of looking more like another Elon Musk-owned entity, The Boring Company—going so low that it’s literally underground. This week will see the first “lockup” period for SpaceX stockholders end, meaning employees and early investors can sell their shares.
These periods almost always lead to increased instability in a share price, but SpaceX is a special case—and not in a good way. As the New York Times reports, 912 million shares in total are going to unlock on Thursday, August 6, which is more than double the current supply of shares that are available to be traded. And it’ll come just two days after the company provides its first public earnings report, scheduled for Tuesday.
The stock is already in a rough spot. After going public at a price of $135 per share on June 13 of this year, it skyrocketed to $225.64 in a matter of days. And then the fall came, likely as a correction to the excessive hype the company generated as the largest IPO ever. It’s now down about 20% from its IPO price and 50% from its all-time high, wiping out about $1 trillion in value.
The expectation is that the end of this lockup is going to lead to a sell-off of company insiders who want to get their money and run rather than be tied to the volatile stock. That has been a concern of the more skeptical watchers of the Musk empire, who have theorized that the SpaceX IPO is little more than a vehicle for Musk to make good on all the debts he created when pulling in investors to buy Twitter and turn it into X or launching xAI and its off-the-rails AI model Grok. Basically, load them up with shares of SpaceX and let them sell off to be made whole.
Unfortunately, as is often the case when the rich cash out, it’s the general public who will get left holding the bag. In this case, it’s not just foolish retail investors who got swept up in the hype cycle. Recent rule changes allowed index providers to fast-track SpaceX for inclusion in index funds, ostensibly to make sure that these investors don’t “miss out” on a bet that could juice their portfolios. The problem is, it’s dragging them down instead.
In SpaceX’s first day of inclusion in the Nasdaq 100, an index of the top 100 companies listed on the exchange, the price slipped nearly 7%. Per the Wall Street Journal, mutual funds and ETFs with about $800 billion in total assets under management planned to pick up SpaceX shares in an effort to track the index. That means people putting their retirement plans in these typically steady indexes are now subject to the swings of SpaceX and whatever scheme is in place to ensure Musk’s investors get their nut.
There is one group of people who might make it out of this unlock period. Per the Times, about $25 billion of SpaceX stock is currently held by short sellers, making it the eighth most-shorted stock in the country and the most-shorted stock of the past month. Assuming things go the way most expect them to, it’s just another point of evidence that there’s good money in betting against Elon Musk.
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