More than 911 million shares become eligible for sale as options traders bet the stock may be nearing a bottom despite a sharp decline from June peak
Early investors in SpaceX had their first opportunity on Thursday to sell portions of their holdings following the expiration of the company’s initial IPO lock-up period, a closely watched milestone that could test investor appetite for a stock that has lost more than half its value since its post-listing peak.
The expiration makes approximately 911 million shares eligible for trading, equivalent to about 7% of the company’s outstanding shares. The newly unlocked shares exceed the 639 million shares sold in SpaceX’s record-setting initial public offering, raising the prospect of a meaningful increase in market supply even if only a fraction of investors choose to sell.
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The development comes after a volatile start to SpaceX’s life as a public company.
The reusable rocket maker debuted on Nasdaq in June with shares priced at $150. The stock quickly rallied above $225 as investors rushed to gain exposure to one of the world’s most valuable space and artificial intelligence companies.
That enthusiasm has since faded.
Shares closed Wednesday at $108.27, leaving the stock more than 50% below its mid-June high after investors reacted negatively to the company’s first quarterly earnings report as a listed company.
The sharp selloff followed SpaceX’s disclosure that capital expenditures during the quarter exceeded revenue by more than two times, highlighting the enormous investment required to expand its satellite network, launch infrastructure and artificial intelligence initiatives.
While the spending reflects the company’s aggressive long-term growth strategy, investors questioned how quickly those investments would translate into sustainable profitability.
Attention has now shifted from earnings to the potential impact of insider selling.
Greg Martin, co-founder of Rainmaker Securities, said the immediate direction of the stock could depend more on the expiration of lock-up restrictions than on the company’s operating performance.
“The near-term path” of the shares may be influenced more by the additional supply entering the market than by underlying fundamentals or corporate strategy, Martin told CNBC.
The current unlock represents only the beginning of a broader increase in tradable shares.
According to the company’s prospectus, another 319 million shares are scheduled to become eligible for sale on Aug. 20, followed by roughly 700 million additional shares in September and a similar amount in October.
The staggered release means investors are likely to monitor insider selling pressure for several months rather than focusing solely on Thursday’s expiration.
One important source of potential selling will remain absent.
Chief Executive Elon Musk, the company’s largest shareholder by a wide margin, owns more than 6 billion shares that remain locked until June 2027.
The continued lock-up of Musk’s holdings significantly limits the amount of stock that could reach the market compared with the company’s overall equity base.
Analysts at Mizuho cautioned investors against assuming that every newly eligible share will immediately be sold.
“While the step-up in potential supply is meaningful, we think investors should understand that shares becoming eligible for sale does not mean the full tranche will be offered into the market,” the firm said in a research note.
Lock-up expirations often create uncertainty because they expand the potential supply of shares without necessarily increasing actual selling activity. Some early investors may choose to realize gains after years of holding privately owned stock, while others may continue holding if they remain confident in the company’s long-term prospects.
Among those planning to sell is Atlanta Falcons safety Jessie Bates III. Bates said he invested approximately $150,000 in SpaceX shares in 2022, when the company was valued at about $127 billion.
With SpaceX now carrying a market capitalization of roughly $1.43 trillion, his investment has appreciated more than tenfold and could now be worth over $1.5 million.
In a statement released through his publicist, Bates said he intends to sell his entire stake to lock in profits.
His investment manager, Michael Ledo, chief executive of RISE Family Office, said Bates has also invested in several other high-profile private technology companies, including OpenAI, Anthropic, Databricks, Cart.com and Turo, as part of a broader strategy focused on long-term wealth creation.
Even as some shareholders prepare to exit, options markets suggest many sophisticated investors remain optimistic about the stock’s longer-term outlook.
Trading activity on Thursday indicated growing interest in strategies designed to benefit from price stabilization rather than continued declines. According to SpotGamma data, approximately $600 million in options premium had traded by midday, with puts accounting for $316 million.
The largest directional trade involved investors selling put options, a strategy that generally reflects confidence a stock will remain above a specified price.
Among the day’s biggest transactions was a large risk-reversal strategy executed shortly after the market opened. The trade involved the sale of roughly $12 million of June 2027 put options with a strike price of $90, generating about $7.7 million in net premium after simultaneously purchasing approximately $4.3 million of June 2027 call options with a $220 strike price.
The strategy effectively expresses two bullish views: first, that SpaceX shares are unlikely to fall another 20% over the coming 10 months, and second, that the stock has the potential to more than double if business fundamentals improve.
A second, smaller risk-reversal trade later in the session followed a similar structure, pairing sales of January 2028 put options with purchases of call options at significantly higher strike prices. Unlike the earlier trade, the investor paid a net premium, indicating an even stronger conviction that the stock could appreciate substantially over the longer term.
Market participants often view risk reversals as a strategy favored by institutional investors because they combine downside income generation with upside participation. The options activity contrasts with the speculative call buying that dominated trading following SpaceX’s IPO, a pattern that had often coincided with periods of weakness in the underlying shares.
Technical indicators also suggest selling pressure may be beginning to ease.
Although SpaceX fell to a fresh post-IPO low on Monday, one day before reporting earnings, the stock has largely stabilized around the $110 level since late July.
Momentum indicators have also improved. The 14-day Relative Strength Index, a widely used measure of price momentum, has recovered from oversold levels reached late last month, while implied volatility has fallen to its lowest level since June 30, suggesting traders expect smaller price swings in the near term.
Perhaps most notably, the shares traded higher on the day the first lock-up period expired, contrary to widespread expectations that the event would trigger a wave of selling.
While additional share unlocks over the coming months could continue to weigh on sentiment, Thursday’s trading indicates that investors are increasingly shifting their focus from near-term technical pressures to SpaceX’s long-term growth prospects in commercial space, satellite communications and artificial intelligence.