Six weeks ago Space X floated five per cent of the company in the largest ever initial public offering, raising 86.25bn to fund future investment and pay down debt. None of the existing shareholders sold any stock, leaving most of the company still in private hands. Despite sustained price falls from the post‑IPO peak, pre‑IPO investors sit on massive gains and face a lock‑up schedule unlike typical IPOs, with the first tranche expiring on Thursday and set to more than double the amount of Space X stock free for sale.

In a normal IPO, directors, officers and significant pre‑IPO shareholders are subject to a 180‑day lock‑up. The lock‑up is drafted broadly to prohibit not only outright stock sales but also a broad array of monetisation strategies. Space X and its underwriters agreed on a custom‑built structure that departs from the standard 180‑day lock‑up for insiders, opting instead for a staggered release schedule.

The first tranche (20 per cent of the total stock to be released over the first 180 days) becomes saleable two days after the company’s first earnings release. This is followed by a series of scheduled unlocks over subsequent months, with a substantial amount (28 per cent) released after Space X reports its third‑quarter financials while Elon Musk and “certain significant investors” remain locked up a full year.

Short interest has surged to an eye‑watering 34 per cent of the total float in the run‑up to the first lock‑up release on 6 August, and the stock has fallen to around $108 at pixel time — less than half the all‑time high stock price achieved just six weeks ago.