Elon Musk Can't Sell SpaceX Shares Until 2027. Here's Who Can, and When.

Elon Musk's ability to sell SpaceX shares is restricted until 2027. This restriction is imposed by a 366-day lockup period. Lockup periods are not legally mandated, but they are often established by underwriters or the company to indicate the ongoing commitment of existing investors over the long term. If Musk and other influential investors are unable to sell their shares for several months or years after the IPO, it could encourage prospective investors to purchase shares.

Research indicates that IPO stocks typically experience strong performance on their first day of trading. From 1980 to 2024, approximately 9,000 companies went public through an initial public offering. On average, these IPO stocks saw an 18.9% return on their first day. However, the average three-year return for these IPO stocks was only 19.1%, which is significantly lower than the market's average three-year return of around 40% during the same period.

Therefore, while IPO stocks may perform well initially, they often underperform in the subsequent years. Musk's situation may cause him to consider this historical data as he becomes eligible to sell his substantial stake in Space Exploration Technologies (NASDAQ: SPCX), which went public this summer.