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The SpaceX IPO has been a windfall for investors — or most of them, at any rate.
But there’s a fear at the back of their minds that they just can’t shake off. What if a significant number of buyers turn tail and become sellers, dumping their SpaceX stock and leaving the most loyal Elon Musk fans holding the bag?
It hasn’t happened yet, since the vast majority of investors for the time being are locked into their shares. Nonetheless, top venture capitalists feel then need to assure that there won’t be a mass selloff when selling opens, betraying a persistent anxiety beneath the bonanza.
“That is the bet now facing the market,” writes Edward Ludlow in Bloomberg’s Tech In Depth newsletter. “Not whether investors want to own SpaceX, but whether the people who already own it will keep owning it.”
With the mountains of cash that the IPO has already generated, the temptation to sell is formidable. It made Musk into the world’s first trillionaire and catapulted SpaceX into one of the most valuable companies in the world, briefly edging out Amazon’s vast empire. Major backers like Andreessen Horowitz now own stakes north of $10 billion. If they sell early, it’ll guarantee massive profits.
Musk loyalists are convinced they’ll hold fast, however. “Many of them are not going to be selling,” Christian Garrett, an investing partner at 137 Ventures, an OG SpaceX investor that hasn’t sold a single share since 2011, told the Bloomberg newsletter.
Shaun Maguire of Sequoia Capital, a major tech VC and another longtime SpaceX investor, was especially bullish.
“I am personally going to hold my shares in this company forever, quite literally,” he said Tuesday in an interview on Bloomberg Television. “This is the biggest vision, the biggest mission of any company in history.”
The structure of the IPO is designed to shield against a premature wave of selling. IPOs typically have a 180 day lock-up period, during which shareholders are unable to sell. This provides stability and prevents insiders, like employees who own small shares, from instantly dumping their stock. SpaceX’s IPO uses a more complex lock-up scheme, with staggered release dates at predetermined times, some of them based on hitting certain milestones. Some of the largest shareholders have committed not to sell until mid-2027.
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