SpaceX Has Efficiently Accomplished Its IPO. Right here Are All the Key Dates Buyers Ought to Be Conscious of Over the Subsequent 180 Days.

After all of the hype, speculation, and doubts, Space Exploration Technologies Corp (SPCX 4.95%) has officially completed its initial public offering. The company raised nearly $86 billion after underwriters on the deal exercised the greenshoe, allowing them to purchase additional shares from the company.

SpaceX had surpassed a $2.5 trillion market cap (as of June 15). The IPO is the largest in history and closed the book on the many naysayers who wondered if the company could raise so much money at an initial valuation of $1.77 trillion.

Still, this is only the beginning of what’s likely to be a very closely watched public company, given its space-related businesses and its already high market cap of over $2 trillion. Investors will want to keep a close eye on this one. Here are all of the key dates to watch over the next 180 days.

Image source: Getty Images.

SpaceX will soon join many market indexes

One appealing feature of the SpaceX IPO is that it will soon be added to many major market indexes, which have added fast entry provisions and removed eligibility requirements to enable SpaceX’s inclusion.

When an index adds a new stock, every index fund and exchange-traded fund (ETF) must also buy the stock, creating demand.

Aside from the broader benchmark S&P 500, which SpaceX won’t be able to join for a year, the stock is expected to be added to most major U.S. market indexes within its first three weeks of trading, according to Jacob Friedman of Focused Wealth Management.

But even before this, options and leveraged ETFs for SpaceX are expected to begin on June 16. Options allow investors to make bets on what SpaceX’s price will be on a given date in the future, giving them the right, but not the obligation, to buy the stock at that time.

Options add liquidity to a stock and, therefore, can narrow its bid-ask spread. Levered ETFs are ways to increase your exposure to a stock, so gains or losses are exaggerated, depending on how a stock moves. These are incredibly volatile and are only recommended for the most sophisticated of investors.

While it’s a bit of a moving target, here are the dates SpaceX is expected to join many of the major indexes:

June 18: Inclusion into the CRSP U.S. Large Cap Index and S&P Total Market index.
June 26: Inclusion in the Russell and MSCI indexes.
July 6: Inclusion into the Nasdaq-100.

The expiration of lock-up provisions

While inclusion in various indexes is a positive for the stock because it drives forced buying and thereby heightened demand, the expiration of lock-up provisions will be a negative for the stock because it leads to more shares flooding the market.

Lock-up provisions dictate when company insiders and employees who have held company stock can sell their shares. SpaceX has a unique, staggered approach.

The first key date for the lock-up expirations will be shortly after SpaceX releases its second-quarter earnings results for the three months ended June 30. An exact date has not been set, but the results are expected to be released around late July or early August, according to Morningstar.

Eligible insiders will be able to sell 20% of their shares on or after the second full trading day following the release of the results. If the stock trades above $175.50 (30% above the IPO price), insiders can sell an additional 10% of their shares.

Insiders will also be able to sell an additional 7% of their shares on or after the following dates:

Aug. 21 (70 days after IPO)
Sept. 10 (90 days after IPO)
Sept. 25 (105 days after IPO)
Oct. 10 (120 days after IPO)
Oct. 25 (135 days after IPO)

All remaining insider shares can be sold 180 days after the IPO, which is scheduled for Dec. 9.

It is all these inclusion and lock-up expiration dates that make the SpaceX IPO so tricky, as they create artificial demand and excess supply. Perhaps they balance one another out somewhat, but I still think it will be difficult to get a true idea of how the market really values the company until after all of these events occur.

That’s why investors might be best served by waiting until after the first 180 days have gone by before deciding whether to purchase the stock.

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