SpaceX Faces 'Time Bomb' as Lock-Up Period Ends
SpaceX is set to release its first financial reports as a public company this week, followed by the initial unlocking of restricted shares. While the influx of supply may trigger volatility, analysts remain largely bullish, with many projecting significant long-term upside.
The largest IPO in history took place last June, when Elon Musk's space giant SpaceX raised $75 billion at a valuation of $1.77 trillion. Within a short time, the stock jumped by almost 50% and Musk became the world's first trillionaire. However, the trend changed quickly and the stock is currently trading about 20% below its IPO price and 46% off its peak. This week, SpaceX faces a pivotal moment: the publication of its first financial reports as a public company on Tuesday, followed by the release of the first portion of locked shares on Thursday.
Understanding the Lock-Up Period
When a company goes public, pre-IPO shareholder shares typically enter a lock-up period. Releases are often determined by fixed schedules or price targets. In SpaceX's case, the IPO involved only a small fraction of the company's total shares—roughly 4.9%, according to data from Cantor.
According to the company's prospectus, a pool of shares is locked for up to 180 days. This week, approximately 912 million shares (6.9%) will be released. Another 319 million will follow 15 days later, and by year-end, the free float is expected to reach 39.5%. In total, shares valued at approximately $494 billion are expected to be released by December.
'Not a Stock for the Faint of Heart'
Eyal Haviv, chief analyst at Value Baribua, notes that this is just the beginning. "The IPO issued few shares, creating high volatility. The entry to this hall was narrow, leading to a valuation surge to $2.6 trillion. Now, the exit is also narrow, and the price reacts accordingly," he explains. He expects selling pressure to mount as private equity funds look to realize gains.
Short sellers are also a factor. Yahoo Finance reported that short volume reached 34% of available shares by late July. Increased supply may dampen the risk of a short squeeze, as short sellers will find it easier to cover their positions.
Dror Karni, CEO of Karni Family Office, warns of the psychological impact: "The tiered mechanism creates a constant drip of new shares, which may suppress the price. Investors are particularly wary of the 366-day mark, when Elon Musk's and controlling shareholders' lock-ups expire—a potential time bomb due to the sheer volume of shares that could hit the market."
Analysts Predict 130% Upside
Consensus estimates forecast $6.82 billion in revenue and a net loss of 29 cents per share. Despite the volatility, 28 out of 37 analysts maintain a positive rating, with an average price target reflecting a 118% premium.
Cantor analyst Colin Canfield maintains an 'outperform' rating, noting that his target price accounts for the eventual removal of lock-up uncertainty. Meanwhile, Oppenheimer's Omri Efroni raised his target price to $250, citing the Cursor acquisition as a key competitive advantage against Anthropic and OpenAI.
