If you only looked at the headlines this morning, you might think something dramatic is happening at SpaceX (SPCX).
But you’re smarter than that. You don’t just look at the headlines, you analyze the story underneath.
How do I know? Because you’re here, reading this. Good for you. Now let’s get to it.
Today marks the company’s first major share unlock since going public, allowing approximately 911 million shares held by employees and early investors to become eligible for sale. That’s a significant number, and it’s one of the reasons some investors are worried the stock could come under pressure in the days ahead.
That concern isn’t entirely unreasonable. When a large number of shares suddenly become available, supply increases. If enough shareholders decide to sell at the same time, the stock will drop.
But here’s what I think many investors get wrong.
A Technical Event, Not a Fundamental One
They confuse a technical event with a fundamental one.
A technical event affects the supply and demand for a stock over a short period of time.
A fundamental event changes the long-term outlook for the business itself.
Those are two very different things, yet the market often treats them as if they’re one and the same.
Every successful IPO eventually reaches this stage. Employees who spent years building the company finally have the opportunity to sell some of their shares. Venture capital firms begin returning capital to their investors. Early shareholders diversify a portion of their holdings after seeing much of their personal wealth tied to a single stock.
None of that should come as a surprise. In fact, it’s exactly what most financial advisors would recommend.
History suggests these events are usually far less important than investors initially believe.
Academic research examining nearly 2,000 IPOs found that stocks declined an average of about 1.5% around their first lockup expiration. More recent studies have found that the effect has been even smaller for large, widely followed companies, with the average decline measured in fractions of a percent over the following month. Trading activity increases as more shares become available, but the selling pressure typically proves temporary.
Think back to some of the biggest IPOs over the past two decades. Meta (META) experienced volatility around its first lockup expiration and went on to become a trillion-dollar company.
Investors worried about Arm Holding’s (ARM) lockup expiration in 2024. Since then, the stock has risen roughly 400% as its central role in AI became increasingly apparent.
At the time, each event generated plenty of headlines and convinced many investors that something meaningful had changed.
Looking back today, almost no one remembers those lockup expirations.
What investors remember is that Meta continued building one of the world’s largest digital advertising businesses. Arm became one of the most important semiconductor companies in the AI buildout.
The businesses ultimately mattered far more than the temporary increase in the number of shares available for trading.
I believe SpaceX deserves to be viewed through the same lens.
Could today’s share unlock create volatility? Absolutely. The stock will likely experience additional pressure over the next several trading sessions as some employees and early investors decide to lock in gains.
After spending years building one of the world’s most valuable private companies, selling a portion of their holdings to diversify their financial future isn’t a bearish signal, it’s good financial planning.
The Truth Is, Nothing’s Changed
More importantly, today’s event doesn’t change any of the reasons investors became excited about SpaceX in the first place.
The company continues to dominate the commercial launch market. Starlink has become the world’s largest satellite internet network and is growing into a high-margin, recurring revenue business. Management continues investing aggressively in Starship, which has the potential to dramatically lower the cost of accessing space and expand the company’s addressable market even further.
Those are the developments that will determine where SpaceX is trading five or ten years from now… not whether employees decide to sell a portion of their shares this week.
That’s one of the reasons I spend so much time focusing on long-term trends rather than short-term market events.
Investors are constantly presented with reasons to change their minds. One day it’s an earnings report. The next it’s an analyst downgrade. Today it’s a lockup expiration. Tomorrow it’ll be something else.
Sometimes those events genuinely change the investment thesis.
But most of the time, they don’t.
That doesn't mean short-term swings are worthless. They're just not what I spend my time on.
That's Nate Bear's job.
While I'm focused on where SpaceX is headed over the next five to ten years, Nate spends his days hunting for exactly the kind of dislocation we're seeing today… the kind that shows up when a stock gets hit with technical selling pressure that has nothing to do with the business itself.
Next week, Nate is opening his live trading room to the public, free of charge, for five straight days. You'll get to watch, in real time, how he finds and trades setups like this.
If today's SpaceX headlines have you curious how a professional trader would actually play this kind of volatility, save your seat for Nate's Open House before it fills up.
Yesterday I wrote about how Amazon used its retail business to build AWS, which eventually became the company’s primary profit engine. I also discussed how SpaceX is following a similar path, using its launch business to build Starlink into a recurring revenue platform that could become even more valuable than rockets themselves.
None of that changes because today’s lockup expires.
If anything, the event serves as another reminder that the market often becomes consumed by what might happen over the next few days while overlooking what could happen over the next decade.
In my experience, that’s where the greatest investment opportunities are usually found.
That’s why I won’t spend much time worrying about today’s headlines.
I’ll be watching the story underneath.
Because headlines create volatility.
The story creates wealth.
Here’s to the future,
Matt McCall
Editor, Market Insights
