SpaceX's $123B Lockup Cliff Meets the Biggest Reg NMS Overhaul in Two Decades

The $123 Billion Question

SpaceX (SPCX) debuted on Nasdaq on June 12, 2026 at $135 per share, valuing the company above $2 trillion and making it the largest IPO in U.S. history. Less than five percent of total shares were released into the public float at launch. The stock rocketed to an all-time high of $225.64 on June 16 before entering a sustained decline.^[1]

As of July 24, 2026, SPCX is trading around $112, down roughly 17% from its IPO price and nearly 50% from its peak — a loss of approximately $250 billion in market capitalization since the June high.^[2][3] The stock has set consecutive all-time closing lows, with HSBC initiating coverage at a $115 price target and a Hold rating.^[3]

The decline is not happening in a vacuum. SpaceX implemented a staggered lockup schedule — departing from the standard single 180-day lockup — with tranches of roughly 7% unlocking at days 70, 90, 105, 120, and 135 after the IPO. The first major wave, releasing between 20% and 30% of total shares, hits approximately two trading days after the company’s Q2 earnings report on August 4.^[1] That means roughly 911.5 million shares — valued at approximately $123 billion at recent prices — could become tradable right as the market digests SpaceX’s first public financial statements.^[1]

A second tranche of about 28% follows after Q3 earnings. By December 8, 2026, when the full 180-day period concludes, approximately 40% of all SpaceX shares will be freely tradable. Elon Musk’s shares carry a 366-day lockup, meaning he cannot sell until roughly June 2027.^[1]

The supply-demand math is uncomfortable. SPCX is already trading in the $112-$124 range, well below the $135 IPO price.^[1] The first major unlock lands right after Q2 earnings, meaning the stock will simultaneously be digesting financial results and absorbing a massive supply increase. Whether the market can absorb that supply without a further price break is the central question for August.

What Would Have to Be True

For the bull case to hold, two things need to happen. First, Q2 earnings on August 4 must deliver results that reassure investors about revenue trajectory, Starlink economics, and the path to profitability. Second, the initial wave of insider selling must be absorbed by sufficient buy-side demand — index funds, active managers, and retail investors who have been waiting for a lower entry point. The 52-week low of $110.85 was set on July 23,^[2] so the stock is already testing levels that might attract bargain hunters.

For the bear case, the stock needs only to continue its current trajectory. A stock down 50% from its peak, trading below its IPO price, with a $123 billion supply overhang arriving in two weeks, has no natural floor. If Q2 earnings disappoint or merely meet expectations, the unlock wave could overwhelm demand. The staggered structure, designed as “release valves,”^[4] may actually prolong selling pressure rather than concentrate it into a single cliff — giving sellers multiple opportunities to exit across August, September, and October.

The Reg NMS Overhaul: Rewiring the Plumbing

While the market focuses on SpaceX’s lockup cliff, the SEC is quietly proposing the most significant structural reform of U.S. equity market plumbing in two decades.

On June 11, 2026, the SEC proposed rescinding Rules 611 and 610(e) of Regulation NMS — the trade-through prohibition and the restrictions on locking and crossing quotations that have governed intermarket order execution since 2005.^[5]

Chairman Paul Atkins framed the proposal as a correction of “unintended consequences that have hindered — rather than enhanced — the long-term growth of our markets,” arguing that the rules, adopted in 2005, have been rendered unnecessary by technological advances.^[5] Commissioner Hester Peirce supported the proposal, calling the existing rules obsolete. Commissioner Mark Uyeda described it as “an important beginning in the broader, more complex journey of reforming the Commission’s equity market-structure rules.”^[6]

The public comment period remains open for 60 days following publication in the Federal Register.^[5]

What Rescission Would Mean

Rule 611 currently requires trading centers to execute orders at the best displayed price across all markets, preventing “trade-throughs” where an order is filled at a price inferior to a quoted price available elsewhere. Rescinding it would allow venues to compete on execution quality, speed, and cost rather than being bound by a single best-price mandate. Proponents argue this would reduce costs and spur innovation; critics warn it could fragment execution quality and harm investors who rely on best-price protection.

Rule 610(e) prohibits market participants from displaying quotations that lock (equal the best bid/ask on another venue) or cross (bid above ask) the market. Rescinding it would allow locked and crossed markets, which some argue would improve price discovery in certain conditions but could create confusion in fast-moving markets.

The timing is notable: if the comment period closes in August and the SEC moves toward adoption, the new regime could take effect during a period of already-elevated market stress from the SpaceX unlock and other supply events.

Overnight Trading Gets Guardrails

The Reg NMS proposal is not the only plumbing change in motion. On May 27, 2026, Nasdaq, NYSE, and CBOE jointly filed a proposal with the SEC to establish temporary price band protections for overnight trading sessions.^[7]

This follows the SEC’s April 2026 approval of Nasdaq’s plan to extend trading hours to 23 hours per day, five days a week.^[8] The overnight session is defined as running from 9:00 p.m. through 4:00 a.m. Eastern — deliberately ending before the pre-market window to allow corporate disclosures (earnings, press releases) to be absorbed without price-band constraints.^[7]

Two-Phase Approach

The exchanges proposed a cautious, two-phase framework:

Key design choices:

• No automatic trading pauses during overnight hours; exchanges retain discretionary halt authority.^[7]
• Two reference prices for band calculation to avoid overly restrictive limits that could hamper price discovery on post-close news.^[7]
• Uniform protections across all venues to ensure consistent investor safeguards regardless of where overnight trades execute.^[7]
• Halts, once invoked, remain in effect for the session — there is no restart mechanism for overnight trading, unlike regular-hours halts resolved via auction.^[7]

The exchanges noted that overnight sessions present “unique challenges for market integrity, including reduced liquidity, increased information asymmetry due to overnight news flow and global developments, and a heightened potential for erroneous trades.”^[7] The framework is designed to limit the frequency and severity of harmful price dislocations — the “fat-finger” and “flash-crash” scenarios — without stifling legitimate price discovery.

The Biotech IPO Window Opens

Amid the market-structure overhaul and the SpaceX supply overhang, the IPO pipeline is quietly reopening — led by biotech.

Scribe Therapeutics (SCTX), a CRISPR gene-editing company co-founded by Jennifer Doudna, priced its upsized IPO on July 23, 2026, raising $128.7 million at $15 per share — the high end of its $13-$15 range.^[9] The deal was upsized from 7.2 million to 8.58 million shares, and Scribe concurrently entered a private placement with Sanofi.^[9] The company’s lead program targets cardiovascular disease through in vivo CRISPR editing of PCSK9 and LPA genes, with first human data expected in 2027.^[9]

Scribe is not alone. The biotech IPO window has been reopening throughout 2026, with H1 shattering records and doubling the prior year’s total.^[10] The XBI biotech index hit a five-year high in Q2, closing the quarter up 23.9%.^[10] BlossomHill and Latigo have also filed for IPOs, joining what Endpoints News called a “flourishing IPO queue.”^[10]

The Selective Window

The window is open, but it is selective. JPMorgan healthcare bankers noted that biotech investors are “far more selective than they were during the pandemic-era boom,” with many companies pursuing a dual-track process — preparing for an IPO while simultaneously engaging with potential acquirers.^[10] Big Pharma, under pressure from major patent expirations later this decade, is actively scouting the pipeline.

The contrast with SpaceX is instructive. Scribe raised $129 million at the high end of its range into a receptive market; SpaceX raised the largest IPO in history and is now trading below its offer price with a $123 billion supply wave approaching. The IPO market in 2026 is not monolithic — it is bifurcating between companies the market wants (revenue-generating, late-stage biotechs with clear catalysts) and companies the market is still pricing (pre-revenue, long-duration, story-driven names).

Secondary Market Activity: Buyers and Sellers

The supply-demand balance is not all one-directional. Several notable buybacks and secondaries are simultaneously in play:

Verisign’s buyback expansion is the largest offsetting demand signal. The company reported Q2 2026 revenue of $435 million (up 6% year-over-year), diluted EPS of $2.38, and expanded its repurchase authorization to $1.5 billion while also gaining .web TLD delegation.^[11] This is a company buying stock back at the same time other companies are issuing or selling — the kind of crosscurrent that makes aggregate market-direction calls difficult.

What to Watch Next

1. SpaceX Q2 earnings — August 4, 2026. The first public financial report for the largest IPO in history. Revenue trajectory, Starlink economics, and profitability guidance will set the tone for the lockup cliff that follows approximately two trading days later.

2. SpaceX first lockup tranche — approximately August 6, 2026. Between 20% and 30% of total shares unlock, valued at roughly $123 billion at recent prices. Watch volume, bid depth, and whether the stock holds above its July 23 low of $110.85.^[2]

3. SEC Reg NMS comment period close — approximately mid-August 2026. The 60-day window from Federal Register publication will close in August. Comment letters from exchanges, market makers, and investor advocates will signal whether rescission proceeds smoothly or faces meaningful opposition.

4. Overnight trading price-band proposal — implementation timeline. The exchanges expect overnight sessions to launch by end of 2026, with Phase 1 protections in place. Any acceleration or delay affects when 23-hour trading becomes a practical reality for retail investors.

5. Biotech IPO pipeline — July through September 2026. Scribe’s post-listing performance will be a sentiment gauge for the broader biotech IPO queue. If SCTX trades above its $15 offer price, the window stays open; if it breaks below, the queue may thin. BlossomHill, Latigo, and other filers are watching.

6. Verisign buyback execution and secondary offering pace. The $1.5 billion VRSN repurchase authorization is the largest current offset to issuance. If buyback activity accelerates across more large-cap names, it partially absorbs the supply from SPCX unlocks, biotech IPOs, and follow-on offerings.

FN2 Research provides market commentary and education, not personalized investment advice. This article does not constitute a recommendation to buy, sell, or hold any security.