SpaceX plans to allow a large portion of its shares to become eligible for resale before the usual six-month restriction period post-IPO, under a staged system conditioned to the company’s performance, a company filing shows.
The approach, designed to avoid a large wave of shares hitting the market at once, would depart from the standard 180-day lock-up that has prevailed in the US.
Most companies going public restrict early investors from selling shares to help stabilise the stock.
SpaceX is betting on its future success for a faster process.
With the company aiming for a $1.75 trillion valuation, sales of even a small percentage of shares could represent tens of billions of dollars.
“It is probably better for the market that there will not be one big lock-up cliff,” said Mayer Brown attorney Ali Perry, who specialises in public launches.
The structure, unusual but not unprecedented, will allow certain shareholders to sell stock as early as after the company’s first quarterly earnings release post-IPO, if SpaceX performs well.
If the company and its stock performs well, most of the restricted pool could become eligible for sale over the following months, with any remaining shares unlocked at the end of the six-month period.
Restrictions usually apply to existing investors, employees, large institutional investors or people with access to privileged information.
Musk, who holds 85.1 per cent of the voting power and 12.3pc of the economic interest in Class A shares, has agreed to a 366-day restriction to sell his shares, according to the filing.
AI chip designer Cerebras, valued above $100 billion, has also adopted a staggered resale system, more common during the 2020 to 2021 IPO boom when companies had leverage to shape terms.
The staged release spreads potential resale over time and helps make post-IPO trading more orderly, but at the cost of potential volatility spread across the six-month period, rather than on a single day, lawyers say.
“The staggered approach smoothes out the initial impact, but doesn’t eliminate the impact, just redistributes it,” Perry said.
Under the plan, up to 20pc of the restricted shares can be sold shortly after the second-quarter earnings release.
An additional 10pc is contingent on the stock trading at least 30pc above its offering price.
Further blocks of 7pc are scheduled to become available at five points between 70 and 135 days after the listing, followed by another 28pc after a subsequent earnings report.
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