About 7% of SpaceX shares held by insiders are set to be made eligible for trading
Current and former SpaceX employees will have some of their shares in the company unlocked this week.
A fresh portion of SpaceX shares will soon be released for trading, potentially setting the stage for volatility in the stock.
Up to 319 million shares held by SpaceX $(SPCX)$ insiders are set to be unlocked on Thursday, representing about 7% of the stock owned by early investors and employees. That equity is subject to a 180-day lockup period that allows for a certain amount of shares to be made eligible for trading at predetermined dates through December.
Shares held by SpaceX CEO Elon Musk and select other investors are subject to a longer lockup.
Thursday's share unlocking marks the second of several such instances that are part of SpaceX's staggered lockup schedule. Each stage of the lockup expiration gives insiders the opportunity to offload more of the stock they accumulated before SpaceX went public in June. It could also give investors a chance to buy in, according to Morgan Stanley's Adam Jonas.
"We think the lockup-expiry overhang is an opportunity rather than a risk, offering a rare entry point into a generational compounder that converts energy into swarming," the bullish analyst said in a recent client note.
So far, unlocked insider shares haven't weighed too heavily on the stock. By the end of Aug. 7 - the day after 911 million SpaceX shares were made eligible for sale - SpaceX's stock had actually climbed 23%.
"Severe anxiety" had caused investors to pull back ahead of that event, according to Zacks Investment Research stock strategist Andrew Rocco. But there was less selling pressure than expected.
"This ended up being a bullish sign for the stock as it signaled that, among other things, newly unlocked shareholders were not quite as willing to dump their shares onto the market as perhaps was expected," Will Rhind, CEO of exchange-traded-fund provider GraniteShares, told MarketWatch over email.
"It's notoriously difficult to predict investor behavior," Rhind said - but based on the first lockup, the second is likely to end in a "similar way," he added.
Evan Mills, a financial advisor at Scholar Advising who works with SpaceX employees, previously told MarketWatch that many of those employees believe in the company's long-term vision, which includes journeying to Mars. While some employees may lightly trim their stakes as more shares are unlocked, Mills thinks many insiders will likely hold out for bigger gains.
SpaceX shares fell 2.6% Wednesday to close at under $140, as the startup LandSpace landed the first stage of its Zhueque-3 rocket on a launchpad, a first for a Chinese company. SpaceX has traded at as low as $104.83 a share and as high as $225.64 a share since its public debut just over two months ago.
Wall Street sees plenty of room for the stock to return to its previous high as SpaceX builds out its businesses. The price target among analysts is $226.26, according to FactSet data, implying room to run 62% above Wednesday's close.
-William Gavin
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