SpaceX Stock: 3 Things to Watch Before the December Lock-Up Cliff

Recent IPOs tend to be volatile for several reasons, including the fact that once a company goes public, insiders aren't allowed to sell their shares for a set period, called the lockup period. Once they are free to sell, whether they do so in droves or largely refrain can either sink or jolt the stock. That brings us to Space Exploration Technologies (NASDAQ: SPCX), the space company that beat the record for the largest IPO in history back in June. SpaceX set up a staggered insider share unlock, meaning shares owned by the company's insiders would become eligible for sale on different dates.

The first was on Aug. 6, and there have been several since; SpaceX passed that test with flying colors. However, hundreds of millions more shares will become eligible for sale by insiders by year-end, including 342 million on Dec. 8. How will the stock react to that? Here are three things for investors to watch to try to answer that question.

Image source: The Motley Fool.

1. The most important flight test yet

What determines whether insiders decide to sell their shares once they are free to do so? That's a complicated question. Personal circumstances aside, though, insiders' outlook for the company can matter a lot. That's why paying attention to SpaceX's operational and financial progress over the next three months could provide clues as to what may happen after more shares become available for sale.

And one of the most important aspects of the business to pay attention to is Starship, the company's next-gen rocket. SpaceX is developing Starship to be fully reusable. This rocket also has a larger payload capacity than the company's previous models, including Falcon 9. SpaceX is planning to conduct Starship's 14th flight test as soon as Sept. 28, pending regulatory approval.

This isn't just another flight test. As the rocket company argues, in previous flight tests, Starship has followed suborbital trajectories to help SpaceX gather data and make improvements as needed. But this time, it will actually attempt to go into orbit. Starship is the centerpiece of some of SpaceX's ambitions, including the planned expansion of its Starlink connectivity business and its goals of sending AI satellites into orbit. If Starship fails its 14th flight test, the stock could drop sharply, potentially denting insiders' expectations for the future.

2. Will SpaceX sign more AI contracts?

SpaceX itself argues that its largest opportunities by far are in the AI industry, where it has identified a massive $26.5 trillion total addressable market. The company's progress in this industry could tell us a lot about its future. Recently, SpaceX's CFO, Bret Johnsen, announced that the company has signed a new AI compute deal worth about $1.11 billion per month.

SpaceX signed several other -- and bigger -- deals earlier this year, and it will be interesting to see whether the company can secure more over the next three months. If it succeeds, SpaceX's medium-term prospects would improve, and perhaps fewer insiders would have an incentive to sell their shares.

3. Watch out for third-quarter results

SpaceX's second-quarter results were strong. Notably, revenue grew by 92% year over year to $7.8 billion, and the company's net loss fell from $1 billion in Q2 2025 to $541 million, a significant improvement, even as it continues to pour billions into its AI-related ambitions. Many analysts expect SpaceX's bottom line to turn positive in the upcoming third quarter.

The space company has an average revenue projection of $12.84 billion (according to Yahoo! Finance) and an average earnings-per-share estimate of $0.14. But what if revenue grows more slowly than expected, or SpaceX remains unprofitable as it invests even more into AI than analysts expect? The stock could decline significantly, especially given its current valuation metrics. SpaceX is trading at 204x forward earnings.

Should you buy the stock?

One thing is for sure: We'll know more about SpaceX's prospects by the end of the year. If the company can post excellent financial results, secure more AI compute deals, and successfully complete Starship's flight test 14, not only could SpaceX's shares soar, but it could also strengthen insiders' confidence in the business's future, potentially reducing selling pressure after lockup expiry dates.

So, there is massive upside potential over the next three months and over the long run if SpaceX can execute flawlessly. But it is profoundly difficult to predict these things (including whether insiders will sell in droves), so there is plenty of downside risk, especially given valuation concerns. I wouldn't buy SpaceX at current levels, but those who do should brace for volatile times ahead.

Prosper Junior Bakiny has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.