SpaceX IPO lets select investors sell day one; Musk locked

SpaceX began trading on Nasdaq at $135 a share on June 11 in what the company said is the largest initial public offering in history. Under the offering terms, founder Elon Musk is contractually barred from selling any shares for 12 months.

The company set aside 5% of the offering for a direct-share program. Participants in that program were chosen at the discretion of SpaceX executive officers and face no lockup restrictions, meaning they can sell their shares immediately after the stock begins trading.

Most early investors and insiders do not have the same immediate access. The agreement releases 20% of their holdings after SpaceX’s first public earnings report, then releases further portions in 7% tranches at 70, 90, 105, 120 and 135 days after the IPO.

At least one institutional investor is preparing to sell its stake as soon as trading opens, according to market sources. That sale and any trades by direct-share participants will add shares to the market on day one while other holders remain restricted.

Analysts and market participants have noted that the arrangement departs from standard practice, where a 180-day lockup typically applies to insiders. Some analysts have estimated a fair value materially below the IPO price and advised that investors may face early volatility.

The listing coincided with scheduled economic data and a market that had been pricing the potential for a Federal Reserve interest-rate decision, factors that can affect demand for new equity offerings.

Chad Anderson, founder of venture firm Space Capital and an early investor in SpaceX, said: “We’ve been invested for almost ten years, it’s our business to return capital to investors.” His comment indicates an incentive for long-held shareholders to monetise gains when restrictions allow.

Investors will be watching trading volumes, flows from newly tradable stakes and the timing of scheduled unlocks. Musk’s one-year lock prevents him from selling in the near term, but other early investors and direct-share participants will be free to trade according to the deal’s timetable.