The market capitalization of SpaceX has soared to $3 trillion: why are only 4% of shares to blame?
The market has witnessed a phenomenon that is rewriting the rules for valuing public companies. SpaceX (SPCX) shares reached a market capitalization of approximately $3 trillion in just a few days of trading, surpassing giants like Amazon and Microsoft in this metric. The company, which had just completed its initial public offering with a valuation of $1.75 trillion, literally skyrocketed, and the key to this mystery lies in an abnormally low free-float.
Supply Deficit as a Growth Driver
During the IPO, only about 4% of the total outstanding shares were released to the market. The remaining 96% are locked up with insiders, employees, and institutional holders under a phased unlocking schedule. In this scenario, any, even moderate, surge in buying demand runs into a microscopic supply. There are virtually no sell orders in the order book, and the price is forced to rise in leaps to "pull out" any sellers.
This is a classic squeeze scenario under conditions of scarcity, but on a scale previously unthinkable for companies of this caliber. Each new wave of purchases pushes quotes significantly higher, creating the illusion of an unstoppable rally.
The Math of $3 Trillion: Illusion or Reality?
The key nuance lies in the methodology for calculating market capitalization. It is calculated based on all outstanding shares, including that locked-up 96%. Thus, the final figure of $3 trillion reflects not the real demand for the entire business, but an extrapolation of the price set on a tiny fraction of traded securities. Essentially, the market values the entire company at the price of the last trade involving 4% of its shares. This is the mechanism of an extremely low free-float on an unprecedented scale.
What's Next: A Time Bomb?
Insiders cannot sell yet: the unlocking is happening in phases. The first major batch will hit the market in August, following the debut earnings report. The next ones will come in the fall, tied to financial results, with the rest distributed through December. Elon Musk's shares are frozen for 366 days.
For now, supply is effectively locked up, but this won't last long. With each unlocking date, the number of available shares will increase in waves. And if purchases were mostly speculative, the balance could swing sharply as soon as sellers gain market access. This is a squeeze under conditions of supply scarcity, which will inevitably lead to a correction when the floodgates open.
Expert Opinion: SpaceX's market capitalization is a vivid example of how the structure of share capital can distort a company's real value. Investors should be extremely cautious: the current valuation is more a reflection of a liquidity deficit than the fundamental value of the business. As soon as the free-float begins to grow, the correction could be as swift as the rise.