When SpaceX made its market debut on June 12, the optimal trade appeared self-evident. Shares were priced at $135, assigning the company a valuation of approximately $1.8 trillion, and closed near $161, lifting its market capitalization above $2.1 trillion. Within four days, the stock climbed to $225.64, and for one fleeting week, its trajectory mirrored the ascent of one of the company's own rockets.

Then the momentum stalled.

Seven weeks after the IPO, SpaceX shares trade below $110 — well beneath the initial offering price. Over $1 trillion in market value has dissipated from the peak. The majority of employees could only observe from the sidelines, as their pre-IPO shares remained locked up.

What distinguishes SpaceX is not merely the scale of its public offering, but the magnitude of wealth it channeled to employees. Having operated as a private company for more than two decades since its founding in 2002, SpaceX allowed employees at every level to accumulate equity over unusually long tenures — a dynamic amplified by steadily rising private-market valuations in the years preceding the offering. Few IPOs have generated so many paper millionaires in such a compressed timeframe. A $50 million position may appear transformative, yet it remains paper wealth until it can actually be liquidated. Market volatility, taxation, and trading restrictions will collectively determine how much of that on-paper fortune ultimately survives.

A Staggered Lockup Structure

Unlike a conventional IPO, where a standard 180-day lockup expires on a single date, SpaceX implemented staggered release schedules. The structure is less common than a single expiration date but is designed to distribute eligible sales across multiple windows rather than concentrating them on one day. Portions of employee holdings become eligible for sale following second-quarter earnings results. Additional tranches will unlock throughout the fall. The principal lockup period concludes in December, while other holdings — including those of Elon Musk — remain restricted until June 2027.

Even once shares become eligible for trading, securities-law restrictions, blackout periods, and trading windows may continue to delay transactions. The scarce resource is no longer the stock price but the calendar itself.

The Sell-or-Hold Dilemma

The central debate — whether employees should divest or maintain concentrated positions — has no universally correct answer. Netflix serves as a instructive precedent: employees who disregarded conventional diversification advice and retained heavily concentrated positions generated some of Silicon Valley's most substantial fortunes. Diversification would have mitigated risk, but it also would have materially diminished returns.

The lesson is not that diversification is misguided. Rather, the best financial outcome and the best financial decision are seldom identical.

Planning Before the First Sale

A more productive line of inquiry concerns what can be accomplished before any shares are sold. Paradoxically, a declining stock price frequently enhances the most valuable planning opportunities.

The federal estate and gift tax exemption currently stands at $15 million per individual. Transferring shares to heirs or irrevocable trusts following a price decline consumes a smaller portion of that exemption while permitting future appreciation to accrue outside the taxable estate. Market volatility also strengthens the economics of instruments such as grantor retained annuity trusts (GRATs), which are designed specifically to transfer future appreciation with minimal gift-tax liability.

Employees holding incentive stock options (ISOs) encounter a comparable dynamic. Because alternative minimum tax (AMT) exposure is driven primarily by the spread between the exercise price and fair market value, reduced prices can substantially lower the tax cost associated with initiating the long-term holding period.

Timing and Tax Considerations

Equity compensation routinely generates a discrepancy between tax withholding and actual tax liability, a gap that is particularly pronounced for highly compensated employees in California. A sale executed in December versus January may differ by mere days yet fall into separate tax years, affording flexibility to manage income recognition, estimated tax obligations, and cash flow.

Long-tenured employees should also determine whether their shares qualify for the federal Qualified Small Business Stock (QSBS) exclusion before divesting. For stock issued during SpaceX's earliest years, when the company qualified as a startup, this provision could shield millions of dollars in capital gains. Once shares are sold, the benefit is permanently forfeited.

The same logic extends to charitable giving. Appreciated stock contributed directly to a charity or a donor-advised fund typically avoids capital gains tax on embedded appreciation. Selling shares first and donating the cash proceeds does not yield the same advantage.

California's Reach

California introduces an additional layer of complexity. Many employees presume that relocating out of state prior to selling automatically eliminates California tax obligations. It frequently does not. The compensation component of equity awards generally remains taxable in California based on the jurisdiction where the services were performed, regardless of where the employee subsequently establishes residency. Distinguishing between where compensation ends and investment appreciation begins can be worth millions of dollars.

The Question No Adviser Can Answer

None of these considerations resolves the question on every employee's mind: Where does SpaceX stock go from here? No financial adviser can provide that answer.

The more constructive question is one only the employee can resolve: If this entire fortune were already converted to cash today, how much would you choose to invest in SpaceX? Everything else — the lockup schedules, the tax elections, the trust structures, the charitable contributions — constitutes a framework for executing on that determination.

SpaceX trained its workforce to think in terms of launch windows. Their financial planning now demands the same operational discipline. The objective is not merely to attain millionaire status on IPO day, but to retain that wealth long after the headlines recede.

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This story was originally featured on Fortune.com.