SpaceX Stock: How Employees Navigate Private Share Sales
SpaceX is one of the world’s most renowned private aerospace companies — pioneering reusable rockets, crewed missions, and ambitious plans for Mars. While these achievements capture global headlines, SpaceX employees have a behind-the-scenes challenge: how to sell company stock in a private-market environment.
Why selling SpaceX stock is different
As a private company, SpaceX employees face hurdles different from those of public-market transactions. First, there is no public exchange for SpaceX shares — they aren’t listed on the NYSE or NASDAQ. No open market to buy and sell shares? Transactions become more restrictive and dependent on private agreements.
Second, the company often enforces a right of first refusal (ROFR). SpaceX can match any outside offer an employee receives for their shares, effectively limiting private-party sales. If you find a willing buyer, but SpaceX matches the terms of the sale, you have to sell to SpaceX rather than the buyer.
Third, employees frequently encounter limited liquidity windows. Periodically, SpaceX holds company-sponsored liquidity events or tender offers where employees can sell a portion of their vested shares. These events typically occur at the discretion of leadership and may not follow a schedule; SpaceX liquidity events have historically occurred every six months.
Company-sponsored liquidity events
During SpaceX buyback opportunities, the company sets the share price and invites employees to sell a portion of their holdings. This arrangement simplifies the process, as the official price reduces guesswork, and standardized documentation eases administrative burdens.
However, each buyback opportunity has historically had participation limits, restricting the number of shares employees can sell. These limits typically range from 10–25% of total vested holdings but vary by event. Retired employees face additional limitations compared to current employees, an important consideration for those planning to leave the company.
Third-party secondary transactions
Employees might find private buyers — who must be accredited investors- outside official liquidity events — to purchase their stock. However, each potential transaction can be fraught with hurdles. SpaceX typically holds a right of first refusal, allowing the company to match any offer on the same terms. This setup can discourage external deals or, at the very least, prolong the negotiation process.
Additional steps — like drafting legal agreements, performing due diligence, and obtaining company approval — can take considerable time and resources when a private buyer is found. Moreover, depending on market conditions and investor demand, employees might sell at a premium or discount to what they believe the shares are worth, introducing further uncertainty.
Opportunities for SpaceX shareholders
While a SpaceX IPO remains uncertain, new opportunities for liquidity are emerging. SOFI recently announced a fund that will allow investors on their platform to gain access to SpaceX stock. This development could provide an alternative path for shareholders looking for liquidity outside of direct company-sponsored buyback opportunities. While not a direct public offering, it introduces new potential for employees looking to monetize their shares.
Vesting schedules & lock-up periods
SpaceX employees often receive restricted stock units (RSUs) or stock options under a multi-year vesting schedule. Because the company is private, there is no publicly disclosed, universal lock-up period. Instead, SpaceX sets its internal policies, including vesting requirements and specific lock-up windows. Employees cannot sell shares unless they are fully vested, and even then, the company must permit a sale — often via a formal liquidity window or a negotiated secondary transaction that SpaceX approves (or in which it exercises its right of first refusal).
RSUs vs. stock options: which is better for SpaceX employees?
For employees who choose between RSUs and stock options, each type of equity compensation has distinct advantages and trade-offs. If you prefer more certainty, RSUs may be a better option, as they provide value regardless of market fluctuations. Still, stock options can offer more upside, especially if SpaceX continues to grow significantly.
RSUs (Restricted Stock Units) provide intrinsic value if the company maintains a positive valuation. Employees receive shares upon vesting without needing to purchase them, making RSUs a more predictable and lower-risk form of equity compensation. However, because RSUs are taxed as ordinary income upon vesting (based on the company’s determined fair market value), employees may face a significant tax burden at vesting, even if there is no immediate opportunity to sell shares.
Stock Options (typically Incentive Stock Options (ISOs) or Non-Qualified Stock Options (NSOs)) offer more flexibility in taxation because options are not taxed upon grant or vesting — only when exercised. ISOs can qualify for lower long-term capital gains tax treatment if held long enough. Options also provide greater upside potential if SpaceX’s valuation increases significantly over time. However, stock options require the employee to pay to exercise the shares, often at a fixed strike price. If liquidity events are unpredictable, employees may risk paying for shares they can’t easily sell. ISOs also have alternative minimum tax (AMT) implications, which can lead to unexpected tax liabilities.
Understanding AMT and AMT credits
One of the key tax considerations for SpaceX employees exercising ISOs is the alternative minimum tax (AMT). When ISOs are exercised but not immediately sold, the difference between the exercise price and the fair market value of the shares is considered an adjustment for AMT purposes. This can trigger a substantial AMT liability, even if the employee has not yet realized any cash proceeds from selling the shares.
However, employees who pay AMT may be able to recoup some or all of this tax in future years through AMT credits. If the AMT paid in a given year exceeds the regular tax liability, the excess can often be carried forward as a credit to offset regular tax in future years. Using AMT credits depends on an employee’s overall tax situation, future income levels, and whether they sell their ISO shares, converting the AMT adjustment into a long-term capital gain.
Preparing for an IPO or public listing
Although Elon Musk has stated his intention to keep SpaceX private, the topic of an IPO — or a Starlink spin-off — continues to surface. An initial public offering would expand opportunities for employee liquidity by opening a public market for trading the shares. Still, it also introduces new variables, such as market volatility and additional regulatory constraints. Even in an IPO scenario, employees typically face a lock-up period (commonly around six months) before they can freely sell their shares.
SpaceX liquidity & the Brighton Jones approach
Even without a formal IPO, SpaceX employees can benefit from a holistic plan for how to make the most of their buybacks, proactive tax planning, and estate strategies. A logical starting point is to evaluate your timing — identify your vesting schedule, anticipate future company-sponsored liquidity windows, and decide whether to wait for an official opportunity or pursue a private, third-party sale. Once you have a clear timeline, the next step is to optimize the transaction by consulting legal and tax professionals who can help you navigate potential issues, such as the alternative minimum tax (AMT) for stock options or capital gains for restricted stock.
This content is provided for informational purposes only and should not be construed as individualized advice. For individualized advice, please consult with your adviser.
