The Space Exploration Technologies (SPCX +0.65%) initial public offering (IPO) is behind us. After its market capitalization soared from $1.77 trillion to $2.5 trillion, the company's valuation has finally settled somewhere around $2 trillion. Looking to buy the dip? There is one reason you may want to wait.
NASDAQ: SPCX
Key Data Points
Aug. 6 could change everything for SpaceX
While the exact date is still to be determined, SpaceX is currently expected to report its first earnings as a public company around Aug. 6. The details revealed during this announcement should have a meaningful impact on the stock price. But there's another catalyst arriving that day that could have an equally big impact.
When SpaceX went public, less than 5% of its total outstanding shares were made available for sale. This limited float made the stock relatively volatile, given that supply and-demand dynamics could quickly go out of balance.
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When SpaceX reports quarterly earnings, however, it will unlock between 20% and 30% of its outstanding shares. In a nutshell, this means that 20% to 30% of the company's outstanding shares -- mostly held by employees, management, and early investors -- will be eligible to sell on public markets. For reference, less than 5% of the company's outstanding shares were eligible for sale during the IPO. The rest were considered "locked", with certain "unlocking" period in the weeks and months following the IPO.
The impact of unlocking schedules can be difficult to predict. But one thing is clear: SpaceX's publicly traded share count will skyrocket in August, with many longtime investors now eligible to sell and book a potentially hefty profit. If you're nervous about the company's current $2 trillion valuation, you may want to wait to see whether this lockup event will provide a better entry point.
