The unlock mechanics
Starting tomorrow, 911.5 million shares of Space Exploration Technologies Corp (NASDAQ:SPCX) will become available for trading. This follows the company's initial public offering (IPO) on June 12, during which around 639 million shares were first released to investors. With this new unlock, the total number of shares that can be actively traded in the market will more than double compared to the IPO's original offering.
The unlock is just the beginning of a planned schedule of share releases over the next few years. These will come at staggered intervals. They gradually increase the float — the number of shares that can be freely bought and sold. By Dec. 8, as much as 40% of the entire company's equity could be available for trading. However, the remaining 60% of shares, including the large stake held by CEO Elon Musk, will remain locked up. They are not available for sale until the middle of 2027.
What triggered the 10% drop
Before the announcement of the share unlock, the stock of SPCX had already taken a significant hit. It fell over 10%. This decline came immediately after the company reported its first quarterly earnings. It was as a publicly traded entity. During the second quarter, revenue saw a massive 92% year-over-year increase. It reached $7.81 billion. However, some troubling signs remained. The company recorded a net loss of $541 million for the same period. Its capital expenditures related to artificial intelligence surged to $23.6 billion. This raised concerns among investors.
The Starlink segment — the company’s satellite internet business — contributed $4.29 billion in revenue. This helped the unit maintain a strong operating margin of 38.6%. Despite these gains, a single contract in the AI division made up a large portion of the revenue. It comes with a 90-day cancellation clause. The unlock is happening at a time when the stock has seen a nearly 10% drop in recent weeks. This leaves early investors and employees considering their next steps. Many of them are now sitting on substantial paper gains.
Market psychology and what happens next
One key point to consider is that financial markets often anticipate and account for major events like this share unlock well in advance. In that sense, much of the potential negative pressure from the news may already be priced into the stock. This is reflected in the 10% decline prior to the announcement. However, the sheer size of the unlock — effectively doubling the float — could still create additional volatility in the short term.
While there is no legal requirement for shareholders to sell their newly unlocked shares, the temptation for early investors and employees to cash in on their gains may build quickly. Many of them are now effectively on-paper millionaires, and the falling stock price has raised concerns about future value. Analysts recommend a cautious approach, noting that the large number of available shares could lead to unexpected selling pressure, regardless of whether early holders choose to act. The next few days could be a critical test for SPCX as it deals with the market implications of the unlock.