SpaceX lockups turn tsunami into constant pounding

Goldman Sachs

09/06/2026 13:00

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
By Robert Cyran

    NEW YORK, June 8 (Reuters Breakingviews) - Elon Musk is trying to slice up a tidal wave. The billionaire’s rocket-maker SpaceX is targeting a $1.75 trillion valuation in its initial public offering, but might only sell $75 billion worth of shares. Selling such a small chunk of a company that was both so wildly hyped and so crazily bid up by its private backers may well support its valuation, but amps up the pressure for existing investors to exit.
This problem isn’t unusual, but SpaceX represents an extreme case. If successful, it will claim the mantle of biggest IPO ever. Yet the initial float will be less than 5% of stock outstanding. The average since 1980 is nearly 30%, according to Jay Ritter, a University of Florida professor who tracks IPO data.
That leaves a huge number of insider shares, in percentage and absolute terms, waiting to cash out. Selling pressure threatens the stability of an already eye-popping valuation. And so underwriters, led by Goldman Sachs GS.N and Morgan Stanley MS.N, have turned to the time-tested tool of lockups, which bar certain investors from selling until a set amount of time has passed.
This should ensure that IPO buyers aren’t immediately slammed by waves of selling and align locked-up executives with their new investors. For most companies, a single lockup suffices. SpaceX’s extreme size calls for extreme measures. Its lockup is split into multiple tranches, with different timelines and a performance hurdle on one. Consequently, a deluge of sudden selling is turned into a long steady stream through to next summer.
Tiered lockups have become more common. Hot chip firm Cerebras Systems CBRS.O employed nearly a dozen in its May listing. Fellow tech giants have used them for years: in 2012, Facebook set five expiration dates, at the time dubbed an “epically complex” scheme. SpaceX outdoes both with 16.
Private markets’ willingness to incubate much larger companies for much longer means that Musk may himself be outdone soon enough. Facebook was 8 years old and worth some $100 billion when it floated in 2012. SpaceX is three times as old and valued at 17 times as much. As the number of long-term investors and employees waiting for liquidity expands, the orderly exit problem becomes more difficult.
The real test is whether index funds forced to snap up stock will be enough to outweigh the issue. SpaceX’s sheer size means that, even with staggered exits, the selling may be so significant that it has simply ensured chronic pain through to next year. At some point, passengers need to step off the rocket-ship.
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CONTEXT NEWS

    SpaceX, the rocket, satellite and AI company run by Elon Musk, is preparing for an initial public offering that seeks to raise $75 billion and value the firm at $1.75 trillion, Reuters reported.
  
The company's IPO prospectus outlines how insiders will be bound by lock-up agreements that limit selling. Musk will only be allowed to sell 366 days after the IPO. A yet-to-be-specified portion of shares held by other significant investors may also be locked up for the same amount of time.
Other insiders will also be bound by lock-up agreements that expire in multiple stages on 16 different dates.

SpaceX's universe of stock lockups https://www.reuters.com/graphics/BRV-BRV/zdpxglkedvx/chart.png
(Editing by Jonathan Guilford; Production by Pranav Kiran)
((For previous columns by the author, Reuters customers can click on CYRAN/robert.cyran@thomsonreuters.com; Reuters Messaging: robert.cyran.thomsonreuters.com@reuters.net))