SpaceX Stock: What Changes on December 8?

Back at the IPO price

0:00 SpaceX stock closed Friday, 28 cents below its IPO price from June. The analysts covering it averaged a target of $257 a share. So either Wall Street is about to look silly or the market is selling something that isn't the business. I think it's mostly the shares, not the rockets. Because the same week SpaceX reported its first giant profit, more than a billion locked up shares became sellable. By the end of this video, you'll know who can still sell how many shares and the date in December that matters next.

The earnings-and-unlock week

0:27 Here's what that week looked like. On October 20th, SpaceX reported a quarterly profit of $4.4 billion on $14.6 billion of revenue. The next day, the stock jumped almost 8% to about $159. Then on October 22nd, it dropped over 9% and almost 200 million shares changed hands. Same company, same rockets. What changed overnight was the number of people allowed to sell. My name is Blake. I dig up stocks before the bull stampede, so you're not buying at the top like Wojak and becoming a professional bag holder.

0:58 And today on 9to5investing, we're looking at who's selling SpaceX stock and whether that's a problem or an opportunity.

How lockups work

1:04 Quick backstory, SpaceX went public in June, the biggest IPO on record, and the stock ran up to about $226. Hopefully you weren't like Wojak and bought at $226. Then it slid back down for one unlock after another until it landed right back where it started. Think of a lockup like a new neighborhood where the builder made early buyers promise not to sell for a while, so the street isn't covered in for sale signs on day one. Once those promises expire, nobody has to sell, but a lot more signs can go up at once.

1:40 That, my friends, is a lockup. When SpaceX went public, most of the shares held by employees and early investors were locked up, and only a small slice traded. SpaceX didn't unlock everything at once, its prospectus spelled out a staircase, smaller batches every few weeks from August through October, and bigger ones tied to earnings reports. The biggest step so far was the one tied to October's earnings report. Two trading days after, more than a billion shares became eligible to sell.

2:06 [Shares] We are free! That was the day of the 9% drop. At that day's price, that batch alone was worth up to nearly $190 billion.

Eligible to sell does not mean sold

2:16 Eligible does not mean sold. An unlock is permission to sell, not an order, and a lot of these people have held SpaceX for years. The first big unlock actually proved that. On August 6th, more than 900 million shares became sellable, and instead of crashing, the stock rallied that week. Other big IPOs had a rougher time. Rivian fell about 21% around its lockup expiry in 2022, and Uber hit an all-time low on its lockup expiry day in 2019. There's even upside to unlock.

2:40 More tradable shares can mean a bigger weight in indexes like the NASDAQ 100, and index funds have to buy that weight. So unlocks aren't automatically bad. They matter when the people who can sell decide the price is good enough, and many early holders still have huge gains, even at today's price.

Insider sales and Form 4s

2:57 And some do sell. You can see it in the filings. SpaceX president Gwynne Shotwell sold about $52 million of stock on September 22nd through a trading plan she set up in June. A trading plan means she picked the rules months earlier, so it's not a panicked exit. But it's still about $52 million of stock hitting the market. If you want to check this yourself, every insider sale shows up on a Form 4 at the SEC within two business days. Look for two things.

3:22 The code S, which means a sale, and a footnote mentioning a 10b5-1 plan. That footnote tells you it was planned months ahead. She's not the only big holder people are watching. After Binance was hacked last week, its co-founder said the exchange owns about $1 billion of SpaceX stock, and that it doesn't need to sell it. So the selling isn't a mystery. The real question is what is still locked and when it opens?

The next unlock dates

3:46 Next on the calendar is December 8th, depending on a price test and the prospectus either a smaller batch or nearly 800 million more shares unlock that day. After that, more batches come two trading days after each earnings report through next summer, plus a couple of fixed dates in March and May. And then there's the big one. On June 12th, 2027, Elon Musk himself can sell up to 6.4 billion shares counting his options. So is the business worth less than the stock says or more?

4:10 Let's look at what the selling is hiding.

Shotwell on raising capital

4:15 What does being public enable that being private, at this point, does not? Capital. $75 billion, give or take. Give or take. Minus $20 billion to pay down debt. Yeah, scaling is very expensive, actually, and the things that we're doing cost a lot to do.

Rockets, Starlink and AI

4:34 Start with what it actually does. It launches rockets, it sells Starlink internet from space, and it rents out computing power to AI companies. Starlink is even becoming a reason people pick airlines. United CEO said this week that it's now one of the biggest factors for passengers. And that $4.4 billion of profit was a huge swing. In the second quarter, SpaceX lost $541 million on $7.8 billion of revenue. Revenue went from $7.8 billion to $14.6 billion in one quarter.

4:56 That's nearly doubled, and it's why the analysts got louder, not quieter. Back in August, management also said its cloud business had $14.1 billion of contracted sales lined up. SpaceX isn't just a rocket company anymore. Starlink mobile: how big is that opportunity? I think that opportunity is huge. If you were to look at numbers of subscribers, I think Starlink mobile will far exceed Starlink broadband in the home. Now, the analysts. The average target is $257, the highest is $800, and Bernstein raised its target to $268 on October 26.

Analyst targets and conflicts

5:39 So who helped bring SpaceX public? Two of the bulls. Morgan Stanley and Bank of America were both underwriters on the IPO, according to the prospectus, and both rate the stock a buy. That doesn't make them wrong. It makes them not neutral. That's the bull case. Now, here's why Negative Nelly isn't buying yet.

The bear case

5:56 First, even with that big quarter, SpaceX still lost over $400 million in the first nine months of the year. Second, the price. At Friday's close, the company was valued around $1.8 trillion, and on next year's expected earnings, it trades close to 50 times. Third, the supply of shares keeps coming. Every few months, another batch can come loose until mid-2027, and every batch is a chance for the stock price to wobble. And that Tesla merger talk?

6:19 There are no agreed terms, so I'm not doing math on a deal that doesn't exist. If you bought near the high of about $226 like Wojak, you're down about 40%, and you didn't even get to enjoy the profit headline.

What I would watch next

6:32 So here's how I would think about it. The business just proved it can make serious money. The stock for now is fighting a supply calendar. What would change my mind? If December 8th comes and goes with little insider selling on the Form 4s, and the stock holds up, the supply story starts to fade. If you're interested, the dates matter more than the headlines. Watch December 8th, then two trading days after each earnings report, and watch whether insiders actually sell or just become allowed to.

6:57 Remember the scoreboard from the start? The stock sits right at its IPO price, while the average target sits near double that. Someone is going to be very wrong. Would you buy shares of SpaceX before December 8th, or wait until the unlocks are done? Full disclosure, I myself do own shares of SpaceX. Tell me in the comments below. The algorithm picked this next one for you, and unlike SpaceX insiders, it isn't locked up.