Stock markets brace for major momentum as SpaceX unlocks 900 million shares

More than 900 million SpaceX shares are set to become eligible for trading on August 6, more than doubling the company's publicly available stock just weeks after its record-breaking entrance onto stock markets.

The scheduled lock-up expiry will allow employees and early investors who acquired shares before the initial public offering (IPO) to begin selling them, potentially putting further downward pressure on the stock, which is already trading at its lowest level since listing, as Reuters notes.

Shares of SpaceX (SPCX) fell nearly 14% on the previous trading day — their second-largest one-day decline on record — to close at $108.27. The drop followed the company's August 5 earnings report, which revealed higher-than-expected spending on artificial intelligence infrastructure, while investors also prepared for the upcoming share unlock.

SpaceX completed the largest IPO in history on June 12 but floated less than 5% of its total outstanding shares. This week's release of up to 911.5 million additional shares will more than double the number available for public trading and marks the first in a series of scheduled lock-up expirations over the next year.

The larger public float could also significantly increase SpaceX's weighting in major stock indices such as the Nasdaq 100, which the company joined earlier this summer. Index weightings are determined by a company's market capitalization and the number of shares available for trading.

SpaceX currently accounts for roughly 1% of the Nasdaq 100. Based on its current share price and the expected unlock of 911.5 million shares, analysts at TD Securities estimate the company's weighting could exceed 3.5% when the index is rebalanced in September, although the final figure will depend on the stock's performance.

Bumpy ride since market debut

Following the IPO, limited share availability combined with strong retail investor demand drove the stock sharply higher. However, shares have since lost around 50% from their June 16 peak and are now trading about 20% below the IPO price of $135.

Many employees and early investors purchased their shares at substantially lower valuations while the company was still private. Despite the recent decline, many remain on significant gains, creating a potential incentive to sell once the lock-up expires.

Companies typically impose lock-up periods after an IPO to prevent insiders from immediately selling their holdings. These restrictions usually last around 180 days before pre-IPO shares become eligible for public trading

SpaceX has adopted a less conventional approach by introducing a staggered schedule for releasing shares. The company has approximately 7.57 billion Class A shares, primarily held by employees and early investors, and nearly 6 billion Class B shares, most of which are owned by Elon Musk and other executives. Following this week's expiry, additional lock-up releases scheduled throughout the year could bring more than 5 billion Class A shares into the public market.

By Nazrin Sadigova