SpaceXpensive
DRINKING FROM THE FIREHOSE
SpaceX’s IPO has so far followed the pattern we predicted in a small note last Friday. Driven by a seriously constrained offering float of just 4% of all those shiny new SpaceX shares, the IPO rocketed from an offering price of $135 to spike as high as $222 on Tuesday. This is a familiar result for crypto veterans: the high enterprise value, low float strategy almost always produces a sharp initial rise followed by eventual catastrophic declines.
As the ancient scriptures teach, past performance is not an indicator of future results. Anyone feeling like they’ve missed the SpaceX rocket should be extremely cautious about trying to board mid-flight: while the deeply unprofitable AI-and-a-little-spaceflight firm’s takeoff has been impressive, it seems due for a much more rocky landing.
Even since that Tuesday high, volatility has taken hold, with the stock shedding 3% on Wednesday morning. It seems plausible $SPCX has already begun the 3-6 month path we predict it will take back down to near - or even below - the offering price.
Above all, as we warned Friday, the engineered demand of the tiny floated offering will begin eroding very quickly. Within just 15 days, brokerage anti-flipping restrictions on the roughly 20% of IPO shares sold to retail will be lifted. Even sharper pressure will come in about six weeks, in early August, when the first tranches of pre-IPO general shares begin to unlock.
These include the holdings of venture firms, insiders, and other early stakeholders, whose incentives broadly lean towards cashing out.
Given the nigh impossibility that SpaceX materially fixes its deep unprofitability in the next six weeks, we expect a rush for the exits.
Over the next six months, supply will more than quadruple from the current amounts. So despite all the sound and fury and excitement around the SpaceX IPO, the stock needs that hype to keep growing, several over, simply to tread water.
We do not like those odds.
Rally to Destroy Sanity
In trading or investing, the greatest risk is your own emotions. The most dangerous emotion for current SpaceX holders is the delirious high they experienced watching the IPO shoot up 20% on its first day.
Easy money, right? If you bought the IPO, you’re gloating at the office water cooler (we hear those are back). If you didn’t buy, you’re wondering if it’s not too late to get in on some of that sweet action. The buyers are obvious financial geniuses, and those who didn’t board the SpaceX rocket are now part of the permanent underclass. Or, at least, that’s how it feels, inverting the advice of the Oracle of Omaha: buy when people are euphoric?
Many intelligent but non-expert observers of the market will look at a 20% day-one rise and project it out into the future. Surely, the optimist will think, this much demand early on must mean the asset will continue appreciating.
But that’s not what’s likely to happen.
The pop was itself driven by financial engineering, including the low float and a roughly 4x higher-than-normal share of retail IPO distribution.
These factors help amplify the short-term (~10 day) initial rally by simultaneously restricting supply and expanding demand. Relative short-term demand was so strong that the IPO’s underwriters, including Morgan Stanley and Goldman Sachs, exercised their “greenshoe” facility to buy an additional 83.3 million shares at the IPO price.
Other key indicators: nearly 50% of all outstanding SpaceX shares changed hands on the first day of trading. Some people theoretically interested in shorting the stock say it’s too expensive to borrow, reducing what would, in a stock with normal supply, be further downward price pressure. Again, we have seen this dynamic in crypto over and over again, where constrained supply means a token cannot be effectively policed in the market by short-sellers, as they will be squeezed, but when the buyer demand is finally exhausted, the price falls off a cliff.
Even perpetually-useful-countersignal Jim Cramer couldn’t help but observe the mechanics of the thin float in action. Up at 4am on Tuesday (good man), he observed that premarket buyers “just can't stop buying and as you can imagine, there are no sellers of size around at this hour. The buyers could walk this one up billions and billions of dollars higher without some source of funds [we think Jim means more supply] arriving.”
Of course, Cramer being Cramer, he stopped at the upside of “bid up billions of dollars,” and left the likely aftermath implicit. This opening rally will sharply deflate if it follows historical patterns - even leaving aside SpaceX’s dicey fundamentals.
An Edward Jones study of 27 recent tech IPOs found that while the offerings averaged a 35% post-IPO rally (which, worth noting, SpaceX actually underperformed so far), the returns retraced and went negative, with an average of 3% net losses after three months, and a whopping 14% lost after six months. Many recent large cap IPOs have had single-year drawdowns of 50% or more. According to data from the team at Prof G, large IPOs have underperformed consistently going back all the way to the 1940s.
And few (if any) of those historical IPOs looked like SpaceX’s. As the chaser to all that supply restriction, an aggressive unlock schedule will mean pre-IPO insiders, including venture investors, will be able to start selling their stakes much sooner than is typical.
We are going to rapidly move from less supply than usual to more supply than usual, with few of the retail buyers who currently hold the stock having any understanding of that dynamic.
Scroll down for a timetable of unlocks and analysis of their likely market impact.
Like a heroin user chasing the (reportedly) amazing high of that very first fix, unprepared IPO buyers may stay fixated on the dizzying early runup, indexing against that performance when considering whether to hold shares or take early profits. The most credulous retail investors will emotionally index to far-future promises of orbital data centers and rocket-based international travel, ideas to which even this creative S-1 doesn’t dare apply specific revenue outlooks.
Those far-future promises will make for very patient holders, if you want to put it positively.
A more pessimistic read would be that they will be very sticky exit liquidity for venture capitalists.
This is the architecture of the extractive modern IPO: An initial huge pop followed by a slow drain as insiders and early investors dump on retail and index funds. Sometimes that later reverses as a company’s initial hype actually translates to performance. The real lesson here is that index inclusion rules and delays do seem to protect investors, so S&P refusing to concede to SpaceX is a test they almost certainly passed
Why? In SpaceX’s case, hitting that long-term performance within any reasonably investable horizon will be a very, very difficult hurdle. This is not to say it is not possible; it is, and betting against Elon has not historically been a winning game. The question, however, is the price and the odds of the bet. At least one of the authors of this piece would be buyers of SpaceX at some price, just not the current one.
The largest segment of SpaceX’s projected “addressable market” (TAM) is AI, a whopping 92%, or $26.5 trillion, of the $28.5 trillion TAM outlined in the S-1. But Grok and other SpaceX AI efforts are simply not in the conversation with products like Claude, Mythos, or even GPT-5 from a revenue or market share perspective. This is made obvious by Musk’s recent decision to lease compute capacity to competitors, indicating Grok etc. don’t currently have enough demand to need the capacity. The positive spin here is that data center capacity is limited and valuable, so perhaps SpaceX is just a data center play? The negative spin is, of course, this relies on the AI bubble continuing and implies SpaceX’s own AI is not competitive enough for even SpaceX to bet on exclusively.
The Tuesday morning announcement that SpaceX will acquire the respectable coding model developer Cursor for $60 billion points to another path to profitability – the use of its currently-inflated equity in a frenzied AI Model Buying Spree.
Obviously acquisitions are a perfectly legitimate path to growth, but the pace implied by this first pickup undermines the premise of the fundraise itself. If SpaceX/xAI weren’t able to organically compete with OpenAI and Anthropic, why on earth would you expect them to create maximum value as managers of other competitive models?
That said, buying companies with inflated equity can get you a killer deal, so as long as SpaceX acquires using stock and receives actual cashflow, this is (somewhat hilariously) a pathway to value creation for (in this case) SpaceX shareholders. The problem would be the required scale to justify the current valuation.
And let’s not forget: AI itself is still an unproven sector. While the technology is fascinating, leaders OpenAI and Anthropic have struggled for nearly half a decade now to find a sustainably profitable business model. Anthropic recently “paused” its transition to a pay-per-token billing model after user revolt, meaning its subscription plans will continue to be heavily subsidized for many users.
What is clear is that AI will be a powerful tool and is here to stay. What is less clear is who actually makes a profit from it.
SpaceX is spending billions in IPO money to improve its competitiveness in an industry whose current leaders aren’t currently profitable, and haven’t figured out how to get there. They could simply be early. They could also be wrong. Or, worst of all, they could be heavily investing in the wrong part of the value stack and someone else (distributors?) capture the value in the long run.
Tidal Wave of Unlocks
The more immediate concern is what happens when various equity unlocks begin. Some are as little as ten days away as of this writing.
Once that begins, all bets are off. Supply will rapidly and steadily expand.
With its combination of low float, ambitious but speculative long-term narrative, and a steady drumbeat of insider unlocks over the second half of 2026, SpaceX is guaranteed to be a volatility trader’s delight. It will be alternately battered and boosted on a day-to-day basis by swings in public sentiment driven by superficial tea-leaf-reading rather than anything material, all with a backdrop of ever larger amounts of stock for the public market to absorb.
SpaceX does not need to tread water to hold the current price. Rather, it needs to increase future expectations and excitement, as every day will add new sell pressures.
Unlock Timetable
June 27 (15 Days post-IPO): 20% of IPO float. – Retail IPO buyers can flip shares. This is a widespread brokerage rule rather than a legal restriction: platforms like Fidelity will limit access to future IPOs for accounts that flip stock early. Some SpaceX holders won’t care about that and could well be dumping already. But it is likely at least a significant proportion will wait.
Remember that a wildly disproportionate 30% of the IPO was set aside for retail buyers - the final ratio apparently ultimately settled at 20%. That, combined with the 4% float, created the current spike, and will (like all financial levers) do the same thing in reverse as some significant portion of retail takes early gains.
On a closely related note: anyone who bought shares in the open market, including on Day 1 post-IPO, have no lockups at all.
June 27, 2026 (Also 15 days post-IPO) – SpaceX will be added to several indexes that have changed rules to allow “fast entry” for big startups. The FTSE Russell Index and the Dow Jones Total Market Index have changed their rules, but the big one here is the NASDAQ 100 index, which will add SpaceX in exactly 15 days. That will create buying pressure from institutions offering index funds.
Whether intentional or not, this confluence of buying and selling forces will counterbalance to some degree, above all obscuring what might have been massive outflows from IPO and day-1 market buyers looking to flip.
This will mute or prevent any media narratives around selling, keeping the true-believer retail buyers in the pen for slaughter by insiders continuing to unload shares.
Mid-August, 2026 (After Q2 Earnings): 20-30% of General shares.A.K.A. The Big One. At least 20% of pre-IPO shares will become available for sale after SpaceX reports its Q2 earnings in early August. If the stock price by then is still 30% above the IPO price, another 10% will become liquid, for a total of 30%. If there’s any single day/week to keep an eye on the action, it’s right here.
We predict an utter rout follows this moment in the midst of a chaotic race for the exits by insiders. Remember: this is four to six times the current amount of stock outstanding that will become available to sell in a single moment.
July 29 - October 02, 2026 (Approximate; 70-135 days post-S1): 35% of General. General holders (pre-IPO buyers) get a rapid-fire series of rich unlocks into the end of 2026. “Up to an additional 7% of the shares may be Transferred on or after each of the dates that are 70 days, 90 days, 105 days, 120 days, and 135 days, respectively, after the date of this prospectus” – a total of another 35%, for a total of 55% or 65% of pre-IPO buyer shares unlocked within six months.
Late September, 2026: ~28% of General. Another tranche of pre-IPO investor blocs will be released for transfer after Q3 earnings. Expect another, smaller dip.
December 9, 2026: All Remaining General Shares. Most remaining General shares will be eligible for sale at this point. Exceptions include Elon Musk’s own stake.
June 13, 2027 (366 days post-IPO): Elon Musk can sell ~5 billion in shares and options, or about 40% of the firm. He won’t sell en masse, because that would crash the market. But he will sell tranches for specific purposes, as he has done frequently with Tesla stock. For instance, Musk sold about $23 billion worth of $TSLA to helpfund his (court-mandated) purchase of Twitter. That didn’t wind up having a devastating effect on Tesla stock price, but only because Musk sold just before the kickoff of a broad stock market rally.
Musk selling SpaceX under current top-heavy conditions could have very different fallout, though it’s nearly impossible to predict true market conditions a year from now. Just be aware Musk is the dominant, final domino in this chain.
H1 2027: Extended Lockups:
This represents roughly 3 billion shares, or 20% of the company, starting in January after Q4 2026 reporting, and fully unlocking by July of 2027 after Q2 2027 reporting. These unlocks are much less likely to have major price impacts, simply because the market will be mostly unlocked by this point.
This is the battlefield ahead of $SPCX holders - or maybe it’s more like a minefield.
Cross your fingers and hope you get to keep your legs.
This is also useful counter-signal, though: if you are truly interested in SpaceX, the time we will have clear price discovery on the majority of public stock is not at the IPO, but in the future after the majority of unlocks have occured. Even if you want to be long, the answer may simply be to wait and buy it at a discount compared to the current price on constrained supply.
Crypto Synthetics and Perps
The tech-hype narrative driving SpaceX is a natural fit for the same people already neck-deep in the cryptocurrency world. Crypto’s most recent cycle/bubble has popped, or is popping (substantially thanks to the heedless idiocy of Digital Asset Treasury companies like Michael Saylor’s Strategy).
That means crypto holders (who as a class are a confusing mix of idealists and hot-money momentum traders) are looking for productive assets to rotate into. SpaceX is also hugely appealing, for a lot of reasons, to traders outside of the United States, and accessing formal U.S. financial markets is often difficult for would-be speculators abroad.
Those factors helped SpaceX perpetual futures become, at least on the day of the IPO, the largest perps offering on Hyperliquid.
Both Hyperliquid and perpetual futures will need an explanation for some readers.
Hyperliquid is a decentralized asset-trading platform that settles to a blockchain. It has grown over the past 3 years or so as a global, seemingly magically unregulated/decentralized venue for trading cryptocurrencies, particularly futures and options. It is effectively accessible anywhere on Earth. Hyperliquid therefore exists as both a provocation toward and critique of regulators: are these regulations helping, or are there better methods and the regulations are an inhibition through either regulatory capture or sheer inertia?
(Disclosure: David has worked with firms in the Hyperliquid ecosystem.)
Hyperliquid doesn’t just trade futures on crypto. It also offers perpetual futures, or “perps,” on stocks. Perps are a product long unique to crypto – a futures contract with no closing or settlement date. Instead, enabled partly by crypto infrastructure, winners and losers pay each other more or less directly at regular intervals, with price parity with spot assets enforced by the funding rate of a trade. Most perps “settle up” every eight hours.
This works out beautifully for trading stocks on a blockchain, because you never actually have to deliver the stock. There are plenty of above-board efforts to formalize “tokenized” stocks and other “real world assets,” but Hyperliquid exists on a regulatory frontier that would make it very hard (impossible?) to offer trustworthy access to the underlying asset.
That was illustrated in some less upbeat news from Binance, which initially seemed to be offering international users access to the SpaceX IPO, but then cancelled that offering ... on the day of the SpaceX IPO. According to a Binance announcement before the market opened on IPO day, its “SPCXx IPO Campaign” was cancelled “due to circumstances outside of our control.”
The obvious presumption is that they couldn’t get the shares, and similar programs from Bybit and Bitget also reneged on their promises.
In fairness, Binance’s announcement of the SPCXx tokenized IPO offering warned that enrolling included no guarantees. But it also said the effort was “the first project to be launched under the Binance Wallet IPO Campaign,” so that’s not off to a good start. We will see if it is both the first and last.
Applicants will/have been refunded their collateral, plus incentives. But it seems likely many missed the window to apply that committed capital to the IPO they were hoping to buy. That’s a frankly embarrassing misstep in the effort to get stocks and other “real world assets” (RWA) into the crypto ecosystem, and ironically, a point in favor of the Hyperliquid perpetual model. If your goal was access to markets and fairness, Hyperliquid arguably outperformed both the crypto exchanges and US stock markets themselves.
It also illustrates the fundamental challenge facing the RWA category: unlike conventional crypto assets, RWAs depend just as much on regulatory and property regimes as they do technological systems. Confusion about that reality is one way crypto-centric traders may misjudge the risk of promises of blockchain stocks, and also a point on which alleged crypto-finance professionals themselves have repeatedly stumbled.
For now, the only really reliable “tokenized equities” are those with entities registered with the SEC itself, and buyers should be aware everything else is, in some way, of questionable provenance.