SpaceX, a leading space and AI company, is set to face a crucial test of investor appetite on Thursday as a lockup expiry enables insiders to sell their shares. The expiry will allow as many as 912 million shares held by employees and other pre-IPO stakeholders to become eligible for sale.

Insider Sales Expected

Heavy selling is expected, but determining who is getting out or trimming stakes will be key to market sentiment on the company’s prospects, fund managers, brokers, and analysts said. Robert Hackel, CEO of institutional brokerage firm R.F. Lafferty & Co., has been fielding calls from pre-IPO investors eager to use the opportunity to sell some of their SpaceX holdings.

Selling will be hard to resist for SpaceX’s employees and early investors as they are “sitting on such massive gains that they’ll have a very strong incentive to realize a return and diversify their holdings,” said Matt Kennedy, senior strategist at Renaissance Capital.

Market Sentiment

The lockup expiry may be to blame for the recent selloff in SpaceX shares, said Brian Mulberry, chief market strategist for Zacks Investment Management. The selloff “seems more sentiment driven, as media reports are that many insiders will look to sell on the strong results this week as their shares become fully vested,” Mulberry said.

The current float is so small that the first lockup expiry alone could more than double the number of shares available for trading, and if a price-based early-release provision is triggered, it could more than triple the public float.

Original reporting: Appleton, WI News Feed (HLL/CB) — read the source article.