To The Moon

On local time August 5th, SpaceX shares experienced a sharp decline of over 11% in pre-market trading, with the stock price halving from its previous peak of $225. This came as SpaceX released its first quarterly earnings report after its IPO, showing strong financial performance but persistent high capital expenditure.

The report revealed that SpaceX generated $78 billion in second-quarter revenue, a 92% year-over-year increase; adjusted EBITDA reached $35 billion, up 191% from the prior year; and capital expenditure stood at $183.7 billion. The AI Segment reported an operating loss of $12.6 billion, with capital spending under this segment at $158.3 billion. The Connectivity Segment, which includes Starlink, posted an adjusted EBITDA loss of $26 billion, while Starlink subscriber numbers reached 12 million. Total second-quarter costs and expenses were $79.6 billion.

Meanwhile, a massive unlocking event is imminent: as of Thursday, Eastern Time, up to 912 million restricted shares held by SpaceX employees and pre-IPO investors will become eligible for sale. This means those who acquired shares at extremely low prices months or even years ago can now potentially realize significant gains. However, their selling activity could exert fresh downward pressure on the stock. The number of shares being unlocked totals 912 million, representing a market value of approximately $114 billion based on the August 4th closing price of $125.33—roughly 1.4 times the current public float. This marks the largest lockup expiry in U.S. capital markets history.

It is important to note that a stock unlock does not automatically trigger selling, as the actual market impact depends on the willingness of holders to divest. Market analysts, however, anticipate substantial selling pressure in the near term. The exact volume of sales will be a key factor influencing market sentiment toward the company. Shares have already fallen 49% from their June highs.

"This could be the most-watched IPO lockup expiry ever," said Robert Hackel, CEO of institutional brokerage firm R.F. Lafferty & Co. "You're going to see a lot of selling." He has recently fielded calls from pre-IPO SpaceX investors looking to use this opportunity to sell some of their SpaceX shares to snap up private placements in other upcoming IPOs, such as AI giants Anthropic and OpenAI, as well as defense tech startup Anduril Industries.

SpaceX employees and early investors will find it hard to resist the chance to sell, given their massive unrealized gains, driven by a strong incentive to lock in profits and diversify holdings," said Matt Kennedy, senior strategist at Renaissance Capital, a firm specializing in IPO research and investment funds.

SpaceX's lockup structure is unusual, as the bank has staged the release over nearly a year rather than allowing all billions of shares to trade on a single day. This means the lockup period will extend into mid-next year, with over 100 billion more shares awaiting unlocking beyond the 912 million set to expire this Thursday.

Elon Musk faced a "black July," with his wealth shrinking by about $363 billion in one month, equivalent to losing two "Jensen Huangs." If he had to spend $1 million daily, it would take him 994 years to burn through that loss.

At the time of SpaceX's IPO, Musk briefly became the world's first trillionaire. However, as SpaceX shares fell below the IPO price, his net worth rapidly declined, dropping by more than the entire fortune of the world's second-richest person. As of August 1st, Eastern Time, Musk's wealth had fallen to $690 billion, its lowest level since December last year. Reacting to the sharp decline, Musk posted on social media, jokingly calling himself a "former trillionaire."