SpaceX just had a very unusual trading day.
After falling 14% on Wednesday following its first earnings report, SpaceX shares bounced back 6.1% on Thursday as investors digested the release of as many as 911.5 million previously locked-up shares, worth roughly $100 billion.
The bigger question now is not just who is selling.
It is who is willing to buy?
A massive wave of shares hits the market
Thursday marked a major milestone for SpaceX shareholders.
The expiration of the lockup agreements increased the number of shares available to trade to about 1.55 billion, up from roughly 639 million when the company went public in June.
Trading activity surged as well.
More than 255 million shares changed hands, making it the busiest trading session since SpaceX’s first week on the public market.
That is a huge amount of stock coming into circulation, especially for a company that only recently completed its blockbuster IPO.
Yet instead of collapsing under the additional supply, the shares ended the day 6.1% higher.
That tells investors something important.
There was enough demand to absorb at least some of the shares coming out of lockup.
Insiders finally have a chance to cash out
The lockup expiration gave early investors and long-serving employees an opportunity to sell shares that had previously been restricted.
Many of them are still sitting on significant paper gains, even with SpaceX trading below its $135 IPO price.
That creates an interesting decision.
Do you lock in gains now, especially after the stock’s wild start?
Or do you hold on because you believe SpaceX has considerably more room to grow?
The heavy trading suggests that some early investors probably did sell. But the stock’s rebound indicates that buyers were willing to step in and take the other side.
Being allowed to sell does not necessarily mean investors want to sell.
The lockup story is far from over
Thursday’s expiration does not remove the overhang completely.
SpaceX has what Bernstein analysts described as an unusually complicated lockup schedule, with nine major unlock points rather than one traditional 180-day expiration.
That means investors will continue watching the supply of shares coming onto the market over the next year.
One of the biggest events comes in June 2027, when Elon Musk’s roughly 6.4 billion Class A shares are scheduled to become eligible for trading.
So while Thursday brought a huge amount of stock into circulation, the market still has several future unlocks to price in.
Short sellers are betting against the stock
The lockup expiration also gave bearish investors something to work with.
Short interest stood at roughly 36% of the float as of Wednesday’s close, according to S3 Partners.
That is a sizeable bearish position.
Short sellers had already benefited from Wednesday’s 14% drop, with the group sitting on more than $9 billion in paper gains from the decline.
But Thursday’s rebound may have forced some of those investors to rethink their positions.
If short sellers started covering, that could have added another layer of buying pressure to the stock.
The irony is that the same lockup event that created fears of insider selling may also have helped trigger buying from short sellers covering their bets.
Investors are still debating who the buyer is
This is perhaps the most interesting part of the story.
If insiders are now free to sell billions of dollars worth of shares, who is stepping up to buy them?
One possible answer is short sellers closing positions.
Another is retail investors.
Retail investors were already buying the dip after Wednesday’s earnings-driven selloff. Vanda Research estimated that retail demand reached about $22.7 million during the first hour of trading on Wednesday.
Institutional investors and other market participants could also be absorbing some of the supply.
For now, the market appears capable of handling the additional shares.
But investors will be watching closely to see whether that demand continues as more lockups expire.
Options traders are making their bets
Activity in the options market has also picked up significantly.
Nearly 1.8 million contracts traded on Thursday, following elevated activity earlier in the week.
One notable trade involved an investor selling more than 14,000 September $70 puts, which can signal a bullish view depending on the strategy behind the position.
There were also large opening trades involving June $220 calls and June $90 puts.
The options activity highlights just how much uncertainty and speculation is surrounding SpaceX right now.
Investors are not simply betting on where the stock goes next week.
They are positioning for potentially much larger moves over the months ahead.
Wednesday’s selloff is still part of the story
It is important not to look at Thursday’s 6.1% gain in isolation.
SpaceX had just fallen 14% the previous day after investors reacted to its first earnings report and concerns over higher-than-expected spending on artificial intelligence.
That means Thursday’s rally did not erase the concerns that triggered the selloff.
Instead, investors appear to have looked past the immediate pressure from the lockup expiration and stepped back into the stock.
Wall Street analysts also remained broadly bullish despite the earnings reaction.
For now, the market seems to be balancing two very different forces: massive potential share supply on one side and strong demand for SpaceX’s long-term growth story on the other.
What investors should watch next
The biggest takeaway from Thursday is that the lockup expiration did not create the selling avalanche some investors feared.
But that does not mean the supply issue is gone.
Here are the key things to watch:
- Future unlocks: More SpaceX shares will become eligible for trading over the next year.
- Insider selling: The market will be watching whether early investors actually cash out or continue holding.
- Short interest: With short interest at around 36% of the float, short covering could create additional volatility.
- Retail demand: Retail investors have already shown interest in buying the dip.
- AI spending: Investors still need to digest SpaceX’s aggressive AI investment plans and what they mean for future profitability.
- Valuation: SpaceX’s enormous valuation leaves little room for disappointment if growth expectations are not met.
- Musk’s future unlock: His roughly 6.4 billion Class A shares becoming eligible to trade in June 2027 could become another major market event.
The bigger picture
SpaceX’s latest move shows just how complicated the stock’s early days as a public company are likely to be.
There is enormous enthusiasm around the company’s growth ambitions, but there is also a huge amount of stock waiting to become available to investors.
Thursday’s rally suggests that demand is currently strong enough to absorb some of that supply.
But the real test will come over time.
If insiders steadily sell while new buyers continue stepping in, the market could absorb the additional shares without much disruption.
If selling accelerates while enthusiasm fades, the same unlock schedule could become a significant source of pressure.
For investors, the most important question may not be whether SpaceX insiders are selling.
It is whether the next wave of buyers still believes the stock is worth owning at these levels.