SpaceX's $123B Lockup, Fading Buybacks, and the Reg NMS Rewrite: A Market-Structure Stress Test

The largest IPO in American history is about to face its first real stress test — and the timing could hardly be worse.

SpaceX (SPCX) raised $75 billion at $135 per share on June 12, 2026, briefly valuing the company near $2.6 trillion in what was the biggest public offering ever executed^[1]. The fanfare lasted roughly a month. By July 16, the stock closed below its IPO price for the first time, at $131.11^[1]. It kept falling — six consecutive losing sessions, nine of ten — bottoming at $123.99 on July 17, down roughly 47% from its post-IPO high^[2]. As of the July 23 close, SPCX finished at $118.24, with after-hours trading suggesting further softness to $116.15^[3].

But the drawdown so far may be a prelude. SpaceX has set August 4 as its first earnings report date, which triggers a major lockup expiration^[2]. Two days later, on August 6, the real stress test begins: up to 911.5 million restricted shares — worth approximately $123 billion at recent prices — begin to unlock and become tradable^[1][2].

The $123 Billion Question

Lockup expirations are a standard feature of IPO mechanics. Insiders, early investors, and employees are typically restricted from selling for 90 to 180 days after the offering, creating a controlled float that gradually expands. What makes SpaceX different is sheer scale. The float at IPO represented only about 40% of total shares^[2]. The remaining 60% — roughly 911.5 million shares — sits behind the lockup^[1]. At the current price near $118, that translates to approximately $108 billion in newly tradable equity hitting the market over a compressed window.

Historical base rates are not comforting. Academic research and brokerage data consistently show that lockup expirations produce abnormal negative returns on average, as selling pressure from insiders and employees overwhelms natural buy-side demand. Apollo’s Torsten Slok has highlighted a broader pattern: IPOs brought to market since 2019 have systematically lagged the broader equity market over the subsequent three years^[1]. SpaceX’s decline below its offer price within five weeks of listing fits a template that has repeated across cycles.

The question is whether the market can absorb $100 billion-plus in new supply without a meaningful price discount. SpaceX’s brief rebound on July 22 — snapping a seven-day losing streak with a 3% gain after the earnings date was announced^[2] — suggests some investors are already positioning for the event. But positioning and absorbing are different things.

The Buyback Buyer Is Disappearing

The SpaceX lockup wave arrives at a structural inflection point in the supply-demand balance for US equities. For two decades, the largest structural buyer of American stocks has been corporate America itself, through share repurchases. That era is showing signs of strain.

Bloomberg reported in June that Big Tech’s AI spending spree is making stock buybacks disappear^[4]. Goldman Sachs reached a similar conclusion, finding that AI capital expenditure is coming at the expense of share repurchases^[4]. Fidelity’s Jurrien Timmer went further, arguing that falling buybacks and rising share counts signal a broader shift in market dynamics^[4].

The numbers are striking. JPMorgan projects that net equity supply — new issuance minus buybacks — could reach $1.5 trillion over the next two years^[4]. That would mark a reversal of the “de-equitization” cycle that has shrunk the US equity market’s share count for most of the post-2009 bull run. Record-breaking IPOs, ambitious AI capex plans, and the SpaceX offering itself are all pushing new shares into the market^[4].

The implication is straightforward: if the corporate buyback machine — historically the most reliable marginal buyer of equities — is being redirected into data centers and GPUs, the market’s capacity to absorb large blocks of new supply is diminished precisely when that supply is accelerating.

The IPO Pipeline Keeps Coming

Despite the SpaceX overhang, the new-issue market shows no sign of slowing.

Scribe Therapeutics, an Eli Lilly-backed clinical-stage biotech developing CRISPR-based therapies for cardiovascular disease, launched its $100 million IPO on July 20, offering 7.15 million shares at $13 to $15^[5]. Sanofi has committed to a concurrent share purchase^[5]. The deal is expected to price and trade by July 24^[6].

Csquare (CSQR), a technology company, filed for a larger offering of 50 million shares at $23 to $27 — a deal that could raise over $1.25 billion at the midpoint^[6].

The IPO calendar for the week of July 19–25 shows multiple pricing events, with additional filings expected in the back half of the year^[6]. Renaissance Capital’s upcoming calendar lists several deals still awaiting trade dates^[6].

Globally, the pre-IPO secondaries market surpassed $106 billion in US venture transactions alone in 2025, with global secondary volume on pace to exceed $210 billion^[7]. That liquidity in the private markets typically precedes public listings — companies and their investors are clearing the decks for IPOs.

The Plumbing Is Being Rewritten

While the supply-demand balance shifts above the surface, the SEC is quietly rewriting the rules underneath.

On June 11, 2026, the Commission proposed the rescission of Rule 611 — the trade-through prohibition that has required brokers and exchanges to route orders to the venue displaying the best quoted price since 2005 — and Rule 610(e), which prevents “locked” and “crossed” markets^[8]. SEC Chair Paul Atkins framed the proposal as long overdue: “After two decades of Rule 611, it is high time that the Commission review its unintended consequences that have hindered — rather than enhanced — the long-term growth of our markets”^[8].

The practical implications are debated. Larry Tabb, head of market structure research at Bloomberg Intelligence, told The TRADE that eliminating Rule 611 alone won’t fundamentally change broker routing because best-execution obligations remain in force. But he argued the real significance is for tokenized equity exchanges and crypto-adjacent venues, which could now be “folded into the SEC equity exchange fabric” without the routing complications that Rule 611 creates for real-time settlement^[8].

This is not happening in isolation. The NYSE received immediate-effectiveness approval in April 2026 for a rule change enabling the trading of securities in tokenized form^[9]. The NSCC — the clearing corporation for US equity trades — was approved in May 2026 for rule changes supporting extended trading hours, a prerequisite for any move toward 24-hour markets^[9]. Nasdaq has filed amendments to the market-wide circuit breaker plan to establish temporary price band protections in overnight trading^[9].

The Q2 2026 Liquidity Landscape report from Liquidnet found that trading has shifted back toward lit venues while off-exchange behavior continues to evolve, with macro uncertainty making execution conditions challenging for institutional investors^[7]. Each of these changes, taken individually, is incremental. Taken together, they describe a market whose plumbing is being rebuilt at the same time its supply-demand dynamics are in flux.

What to Watch Next

• August 4 — SpaceX earnings: The first quarterly report for the largest IPO in history. Revenue trajectory, launch cadence, and any commentary on the lockup will set the tone for the selling pressure that follows.
• August 6 — lockup expiry begins: The first tranche of restricted shares becomes tradable. Watch SPCX volume and the bid-ask spread for early signs of absorption stress. If selling is met with thin bids, the discount could be steep.
• SCTX pricing and debut (July 24): A small deal, but a signal of whether the biotech IPO window remains open despite the SpaceX overhang. First-day performance and aftermarket trading will indicate whether smaller deals can clear when the market’s attention is elsewhere.
• SEC comment period on Reg NMS: The 60-day public comment window on the proposed rescission of Rules 611 and 610(e) will generate industry pushback. Watch for exchange filings, broker-dealer submissions, and any Commission signals on timing for final adoption.
• Q2 2026 buyback data: The next set of S&P 500 repurchase figures will confirm whether the AI-capex-vs-buyback trade-off is accelerating. If net buyback yields continue to shrink while issuance rises, the supply-demand imbalance widens.
• Tokenized equity and extended-hours filings: NYSE’s tokenized trading rule and NSCC’s extended-hours approval are the foundation pieces. Watch for additional SRO filings, new venue launches, and any pilot programs that test the new infrastructure.

The collision of SpaceX’s lockup wave, a structurally diminished buyback buyer, and a regulatory framework being rewritten in real time creates a market-structure moment that is easy to miss in the day-to-day noise. The next six weeks will offer the first concrete test of whether the system can absorb what is coming.