Key Points
Elon Musk’s SpaceX cemented its place in the record books by raising $75 billion with its initial public offering (IPO) and surpassing the likes of Amazon, Broadcom, and Tesla in market cap.
Structural changes to index inclusion and SpaceX’s historically low float are, together, artificially boosting its share price.
However, SpaceX’s staggered lockup schedule is set to separate retail investors from their money.
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A little more than a week ago, Space Exploration Technologies (SpaceX) (NASDAQ: SPCX) cemented its place in Wall Street history by raising $75 billion with its initial public offering (IPO) and debuting as one of the largest companies in the world.
After only three trading sessions (through June 16), Musk’s artificial intelligence (AI) and space economy titan commanded a $2.66 trillion valuation, placing it ahead of some of Wall Street’s most influential businesses, such as Amazon, Broadcom, and Musk’s other trillion-dollar company, Tesla.
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Several factors have positioned SpaceX stock for early success. But these early gains can quickly turn into a nightmare for retail investors once SpaceX’s unique lockup period takes effect.
Image source: Getty Images.
Structural index changes and a historically low float are boosting SpaceX’s share price
Although investor euphoria for the SpaceX IPO has been off the charts, it’s the structural changes to major index inclusion and SpaceX’s historically low float that are primarily responsible for its stock rocketing out of the gate since June 12.
Long before SpaceX went public, several oversight committees amended the rules governing index inclusion. It began with Nasdaq (NASDAQ: NDAQ) Global Indexes refreshing the rules for inclusion in the growth-stock-dominated Nasdaq-100. Effective May 1, low float requirements for the Nasdaq-100 were waived, and companies that would rank among the 40 largest in the Nasdaq-100 are eligible for fast-entry inclusion after just 15 trading sessions. This is down from a previous wait period of around three months.
Less than four weeks later, the U.S. Russell Equity Indexes amended its rules ahead of the SpaceX IPO. Instead of reviewing newly public large-cap companies for inclusion once per quarter, giants like SpaceX can be added to the appropriate U.S. Russell Indexes after only five trading days.
When will the biggest ETFs include SpaceX? $SPCX
-S&P 500 ETFs ($VOO $IVV $SPY): will have to wait at least 1 year (rules weren’t changed)
-Nasdaq 100 ETF ($QQQ): 15 trading days
-Total Stock Market ETFs ($VTI $ITOT $VT): 5 trading days.
-Growth ETFs ($VUG $IWF): 5 trading days— Charlie Bilello (@charliebilello) June 12, 2026
These structural index changes grant SpaceX fast entry into the Nasdaq-100, Russell 1000, and Russell 3000 indexes. More importantly, it forces passive funds that attempt to track these indexes to purchase SpaceX stock shortly after its IPO. This forced buying can translate to tens of billions of dollars in demand.
Additionally, SpaceX sold approximately 555.6 million shares for its IPO, representing a little over 4% of its outstanding shares. Most companies that are going public sell 10% to 25% of their outstanding shares.
Given the forced buying we’ll witness from passive funds, mutual funds, and 401(k)s tied to structural index changes, a significant chunk of the company’s float (tradable shares) will be scooped up. This should provide a temporary, artificial boost to SpaceX’s share price.
Image source: Getty Images.
SpaceX’s staggered lockup period is going to completely wreck retail investors
Given Elon Musk’s long-term success running Tesla, and the fact that SpaceX is spearheading two of Wall Street’s hottest addressable opportunities (AI and the space economy), it would be easy for retail investors to become complacent as SpaceX shareholders. But expecting this artificial price boost to continue is likely to be a costly mistake.
Removing structural index protections, coupled with SpaceX selling a limited number of shares, can lure retail investors long enough to kick-start the greatest wealth transfer in Wall Street’s history… from retail investors to SpaceX insiders.
Typically, newly public companies agree to a 180-day lockup period, which starts the day a company goes public. During the lockup period, insiders (high-ranking executives, board members, and early investors) aren’t allowed to sell their shares. It’s essentially a measure put in place to prevent insiders from dumping their stock after an opening-day/week pop.
SpaceX has adopted a staggered lockup schedule that allows some of its insiders (not including Musk, who can’t sell his shares for 366 calendar days) to begin cashing out considerably sooner than the 180-day mark. On the second trading day following the company’s first quarterly report as a public company in August, insiders can start selling. They can also sell a percentage of their shares on calendar days 70, 90, 105, 120, 135, and 180, as well as if shares jump more than 30% above their IPO price.
Great look at the SpaceX shares unlock schedule as well as the potential passive buying schedule from @JSeyff @FrancisSharoon Depending on the early post-IPO returns, this could really play with and disperse the returns of “passive” funds (which is why there’s arguably no such… pic.twitter.com/KOuEkJlngF
— Eric Balchunas (@EricBalchunas) May 28, 2026
The dynamics responsible for artificially lifting SpaceX’s shares will allow insiders to steadily fleece retail investors over several months.
Furthermore, SpaceX’s lengthy prospectus warns that debt issuances and share-based dilution will be used to fund the expansion of its AI data center infrastructure and for merger and acquisition opportunities. Not only will retail investors be fleeced by insiders, but Musk and Co. are expected to dilute their shareholders.
Mind you, I haven’t even discussed SpaceX’s inability to generate recurring profits, the subdued sales growth of AI start-up xAI relative to Anthropic and OpenAI, or the company’s historically unsustainable price-to-sales ratio of 142 as of June 16.
The company’s unique lockup period is simply the first of several catalysts that are going to completely wreck retail investors.
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Sean Williams has positions in Amazon. The Motley Fool has positions in and recommends Amazon, Broadcom, and Tesla. The Motley Fool recommends Nasdaq. The Motley Fool has a disclosure policy.
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