SpaceX is facing potential stock volatility as the first lockup period on its shares expires Thursday, allowing employees and insiders to trade shares that were previously restricted following the company’s blockbuster initial public offering (IPO) in June. Lockup agreements are designed to prevent a flood of shares hitting the market immediately after an IPO, which could depress the stock price.

The expiration will release approximately 912 million shares, more than doubling the current tradable supply. This influx of available shares may increase selling pressure and contribute to further price declines. Since its debut on the public markets, SpaceX’s stock has experienced significant volatility. After earlier surges, the share price has fallen nearly 50 percent below its $135 initial offering price.

Experts warn the end of the lockup could spur additional fluctuations. Patrick Corrigan, a law professor at the University of Notre Dame who studies IPOs, notes that on average, lockup expirations lead to a 1.5 percent decline in stock prices due to increased selling. Jay Ritter, director of the IPO Initiative at the University of Florida, highlighted that SpaceX’s trading float—shares available to the public—is currently under 5 percent of total shares but will increase to over 12 percent post-lockup, amplifying potential price swings.

SpaceX’s IPO was the largest in history, raising $85.7 billion and initially valuing the company at over $2 trillion. The offering propelled Elon Musk, who controls more than 80 percent of SpaceX’s voting shares, into becoming the world’s first trillionaire. However, the stock’s subsequent decline has eroded much of that market value. Musk’s net worth has adjusted accordingly and is estimated around $684 billion, according to the Bloomberg Billionaires Index.

Short sellers have mounted sizable bets against SpaceX’s shares, borrowing stock to profit from price drops. Nearly $25 billion worth of tradable shares—about 34 percent of the float—are held by short sellers, making SpaceX the most heavily shorted U.S. stock over the past month, according to financial data firm S3 Partners.

SpaceX has implemented a staggered lockup schedule, with successive tranches unlocking over the coming months, culminating with the largest batch of 1.3 billion shares becoming available after the company’s earnings report in the fall. Musk himself is barred from selling the majority of his shares until next June.

The upcoming lockup expiration has prompted current and former employees to discuss strategies for managing their holdings in online forums, with some expressing concern about the concentration of their wealth in a single stock.

Morgan Stanley analyst Adam Jonas, who was involved in SpaceX’s IPO, expressed cautious optimism. He pegged a “realistic” near-term price floor at $100 per share but valued the company at $300 per share based on fundamentals. Jonas pointed to a disconnect driven by polarized investor sentiment rather than changes in the company’s prospects.

Market strategists warn that SpaceX’s stock performance serves as a reminder of the challenges that accompany large tech IPOs and that the stock may face continued turbulence in the near term. Matt Kennedy, senior strategist at Renaissance Capital, noted that SpaceX ranks among the lowest performers in 2024 IPOs raising over $50 million, drawing parallels with other tech companies that experienced post-IPO declines but ultimately recovered.