SpaceX is set to make its historic market debut this Friday, with an IPO price set at $135 and an initial notional market capitalization of $1.75 trillion. As a super unicorn of a scale rarely seen on Wall Street, its post-listing price trajectory and the battle for shares have captivated global investors.
In a recent in-depth discussion, Alexandra Mertz, a prominent Tesla community influencer and former Wall Street analyst, shared insights with host Herbert. Based on model projections from the AI tool Grok, the extremely low initial free float (just 4.3%) could lead to an epic supply vacuum for SpaceX shares in the early days of trading.
Critical Dates for Trading Strategy
Mertz argues that investors should focus on two key dates with significant trading value: the peak of passive buying driven by the July 7th inclusion in the Nasdaq 100 index, and the overlap period in the second half of July when early shareholder lockups expire two days after the Q2 earnings call. Behind this meticulously orchestrated IPO lies a larger capital strategy involving Elon Musk's personal $7 billion tax liability and potential quid-pro-quo arrangements with Wall Street banks.
Index Inclusion and the Supply Crunch
The first critical date is July 7th. This is the first trading day after the Independence Day weekend and the 15th trading day post-IPO, when SpaceX will be formally added to the Nasdaq 100 index. At that time, index funds tracking benchmarks like the Nasdaq, FTSE Russell, and CRSP will be forced to make unconditional, passive purchases in the open market based on float-adjusted mechanisms. Estimates suggest this passive buying could range from $80 to $180 billion, likely closer to $150 billion. With early shareholders unable to sell, the free float will be at its absolute lowest. The Grok model predicts the share price could surge to between $275 and $300 during this period, more than doubling from the $135 IPO price.
Lockup Expiry and the Price Floor
The second critical date is two business days after the Q2 earnings call, expected around July 22nd or 29th. Market rumors suggest the first large-scale lockup expiration for early insiders, potentially up to 30%, will occur then, sparking fears of a sell-off. However, Mertz clarifies that analysts are overlooking a key detail: roughly 50% of these early insider shares belong to Elon Musk himself, who is subject to a strict 366-day lockup. Therefore, the actual potential new supply hitting the market is only 10% to 15%, not 30%. Furthermore, major early shareholders like Ron Baron have stated they will not sell and plan to buy more, while BlackRock has expressed strong interest in purchasing $5-10 billion worth of shares at the IPO—an amount exceeding readily available supply. Even if all early shareholders besides Musk were to sell 100% of their holdings at expiry, the Grok model's extreme scenario suggests the quarterly rebalancing buy orders from index funds would provide strong support, with the price likely finding a floor around $150 and not falling below the $135 IPO price.
The "Goldilocks" Merger Scenario
Wall Street is piecing together a compelling narrative. Musk faces a significant personal deadline: he must exercise stock options from his 2018 Tesla compensation package by August 15th of this year, triggering a massive $7 billion personal tax liability due in January 2028. A higher Tesla share price around the time of the exercise is financially advantageous for Musk. The most logical "Goldilocks scenario" now being discussed involves announcing a stock-for-stock "merger of equals" between SpaceX and Tesla Motors (TSLA) in the window between the July 7th Nasdaq inclusion (when SpaceX's price and market cap peak) and the late-July lockup expiry. If SpaceX's market cap, buoyed by index funds, rises to around $3 trillion, announcing such a merger could instantly pull Tesla's market cap—then around $1.5 trillion—up to a comparable level, effectively doubling Tesla's stock price. This would create a locked-step movement between the two stocks, driven by arbitrage funds, and elegantly address Musk's funding needs for the tax bill.
Wall Street's Political Calculus
The biggest hurdle for a merger would be the shareholder vote at Tesla's annual meeting, likely in November. After exercising his options, Musk is estimated to control about 17.5% of the vote. Passing a merger requires a majority of all outstanding shares (50% plus one vote), meaning Musk would need to secure an additional 32.5% in favor. Notably, SpaceX's IPO has unusually included Charles Schwab, Morgan Stanley, and JPMorgan as core underwriters and distributors—institutions that were previously vocal opponents in key Tesla votes. The political bet here is clear: by offering these firms a slice of Wall Street's most lucrative and prestigious IPO in history, Musk may be securing their "yes" votes for the merger proposal in November. In the face of enormous economic incentives, Wall Street's self-interest would likely lead to compliance.
Why SpaceX Must Be the Acquirer
Addressing technical questions, the discussion highlighted why a reverse merger (Tesla buying SpaceX) is improbable. SpaceX's S-1 filing establishes a robust "founder's fortress" governance structure designed to protect Musk: Class B shares with 10x super-voting rights (97% controlled by Musk), mandatory arbitration for shareholder lawsuits (preventing public courtroom battles), and succession clauses. Tesla's current governance lacks such absolute control for Musk. Therefore, folding Tesla into SpaceX's legal structure would permanently secure Musk's control over his combined empire, shielding it from activist investors and court interference. The merger would be a 100% stock transaction, not a cash deal, utilizing SpaceX's vast authorized share capital (360 billion shares, with only ~130 billion issued post-IPO) to issue new shares in exchange for all Tesla stock.
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