Elon Musk Can't Sell SpaceX Shares Until 2027. Here's Who Can, and When.

Research has consistently shown that IPO stocks have performed well on their first day of trading. From 1980 through 2024, roughly 9,000 companies went public via an initial public offering. The average first-day return was 18.9%.

Notably, however, the average three-year return for these IPO stocks totaled just 19.1%. The market's average three-year return over the same time period was closer to 40% . So while IPO stocks typically perform well at first, they often underperform in the years that follow. Perhaps Elon Musk will keep that data in mind as he becomes eligible to sell his massive stake in Space Exploration Technologies (NASDAQ: SPCX), which went public this summer.

Musk is currently bound by a 366-day lockup period that prevents him from selling any of his SpaceX stock. Lockup periods are not required by law. They are typically designed by underwriters or the company itself to signal to future IPO investors that the existing investor base remains committed over the long term. If Musk and other key figures are unable to sell their shares for months or years after the IPO, prospective investors will likely be more willing to buy in.

Musk's 366-day lockup expires June 12, 2027. While it is very unlikely that Musk liquidates most, if any, of his position, this expiry date marks a massive increase in SpaceX's publicly available float. When SpaceX first went public, less than 5% of the company's total outstanding shares were made available for purchase. After the expiration of several interim lockup periods -- none of which applied to Musk himself, but rather other legacy investors -- around 17% of SpaceX's total share count is now publicly traded. Nearly all of SpaceX's outstanding shares will be available for sale after Musk's lockup period ends next summer.

The expiration of lockup periods can have several impacts on a company and its stock price. In fact, we're already seeing SpaceX stock fluctuate in response to news about these milestones.

SpaceX's stock fell as it reached this critical lockup date

On Sept. 23, SpaceX shares fell sharply after President and COO Gwynne Shotwell filed to sell 342,170 shares worth roughly $50 million. The news rattled investors, given that a post-IPO lockup scheduled to expire on Sept. 24 will release an additional 328.4 million shares for potential sale by early investors and select employees.

SpaceX CEO Elon Musk. Image source: The White House.

In all, there are 15 primary lockup dates for SpaceX stock. Five have already been reached since the company's IPO. The next, as mentioned, will occur on Sept. 24, clearing 328.4 million shares for sale. Another 328.4 million shares will be made available on both Oct. 9 and Oct. 24, followed by a whopping 1.3 billion-share release in November, when third-quarter earnings are announced.

The unlock schedule doesn't end there. Another 797.6 million shares will be released in December, followed by more than 7 billion shares throughout the first six months of 2027.

Some analysts think any selling pressure will be a buying opportunity. "We think the lock-up expiry overhang is an opportunity rather than a risk," stresses Adam Jonas of Morgan Stanley. Simple changes in SpaceX's public float, he argues, don't change the company's long-term fundamentals. "We are bullish and believe that we will look back to the lockup-expiry debates of 2026 as buying opportunities within a long-term, differentiated bull case," adds John Godyn of Citigroup.

Still, few companies this large have ever debuted with such a low initial public float, only for massive blocks of shares to be made available over the following 13 months. What exactly will happen with SpaceX remains unknown. And any short-term weakness in the share price could affect the firm's competitiveness, even if Wall Street remains unfazed.

That's because we are currently in an arms race for AI. "[T]he risk of underinvesting is dramatically greater than the risk of overinvesting for us here," warns Sundar Pichai, CEO of Alphabet. AI companies everywhere are deploying capital as quickly as possible to scale compute infrastructure and remain competitive. SpaceX is no exception.

The issue, however, is that SpaceX is currently not profitable. It will likely need to sell shares to sustain its growth initiatives. If SpaceX's share price falls, it will directly affect its ability to create shareholder value. So while lockup periods are largely viewed as short-term, logistical events, the impact for SpaceX could be more profound than usual.

Citigroup is an advertising partner of Motley Fool Money. Ryan Vanzo has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet. The Motley Fool has a disclosure policy.