Up Almost 50% From Its IPO Price, Could SpaceX Early Investors Sell 37% of Their Shares in August?

Space Exploration Technologies (NASDAQ: SPCX) closed at $201.80 per share on Tuesday, June 16. That puts it 49.5% above its initial public offering (IPO) price of $135 per share.

Here's why that's a significant milestone for SpaceX, and what it could mean for the growth stock after it reports second-quarter earnings.

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Get ready for the August supply surge

SpaceX raised $75 billion at a $1.77 trillion valuation, and underwriters then exercised their options to buy more shares, bringing the total raised to $85.7 billion. That's very little supply relative to SpaceX's $2.6 trillion market cap -- especially given the level of demand from retail investors and exchange-traded funds.

Although no official date has been announced, SpaceX could report second-quarter earnings in early to mid-August. In addition to being its first report as a public company and offering investors insight into how its business is progressing, that report will be important because it could lead to a surge in the number of shares available to the public -- known as the float.

SpaceX has an unusual lockup period schedule that will expedite early investors' ability to sell shares as certain targets are met. In its Form S-1 filing with the Securities and Exchange Commission, SpaceX noted that up to 20% of Early Release Eligible Shares may be transferred on or after the second full trading date after the release of its quarterly results for the period ended June 30, 2026. But if the stock price is at least 30% higher than the public offering price for at least five of the 10 consecutive trading days up to and including the day of that earnings release, then an additional 10% of Early Release Eligible Shares may be traded.

A 30% premium to the offering price of $135 would be $175.50 per share, which SpaceX is already well above. So if the stock simply wanders sideways between now and two weeks after its next earnings report, early investors would be able to sell 30% of their shares.

Additional tranches equal to 7% of Early Release Eligible Shares will be added to the amount eligible to be sold at the 70-day, 90-day, 105-day, 120-day, and 135-day marks after the IPO. The 70-day mark will be Aug. 21.

So if SpaceX reports in early to mid-August and it stays above $175.50 per share, then 37% of Early Release Eligible Shares could be sold at that point.

Granted, that doesn't mean that SpaceX's float will actually increase by 37% overnight. For starters, some early investors may not want to sell. And "certain significant investors," like Elon Musk, have agreed not to sell shares for at least 366 days after May 20, the date SpaceX filed its Form S-1.

This wild ride is just getting started

SpaceX is a phenomenal company, so investors' excitement at the chance of buying the stock is understandable. But long-term investors may want to wait until the balance between supply and demand evens out before diving in. Given the unprecedented nature of an IPO of this size and the small float, it's unlikely SpaceX is rising solely on its long-term potential. The stock could prove just as volatile on the way down as it has on the way up.

Daniel Foelber 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.