If you work, or have worked, at SpaceX, you’ve likely got a significant chunk of your net worth tied up in company equity. ISOs, RSUs, ESPPs… and now, the question everyone seems to be circling back to:
“What should I be doing now to prepare for a SpaceX IPO?”
It’s a fair question. And the honest answer is: it depends on what kind of equity you own, how much you hold, what your tax exposure looks like, and whether you have a strategy in place before liquidity arrives.
Below, we’re walking through the five most common questions we hear from SpaceX employees. Whether you’re still at the company or you’ve already moved on, these answers apply to you.
1. Will my equity automatically become liquid the day SpaceX IPOs?
This is probably the most common misconception we run into — and it’s an important one to get right.
When SpaceX goes public, your ISOs, NQSOs, and RSUs will generally convert into publicly traded shares. That’s exciting. But “publicly traded” doesn’t mean “immediately sellable.”
Most employees, current and former, will be subject to a lock-up period. Historically, IPO lock-ups run 90 to 180 days after the company begins trading. During that window, you’re legally restricted from selling, even as you watch the stock price move on the open market.
That said, lock-up terms are not one-size-fits-all — they’re negotiated as part of the underwriting process, and high-profile, high-demand IPOs have more room to get creative. In some cases, underwriters may allow certain insiders to sell a portion of their shares directly in the IPO itself. There is also the possibility of SpaceX using a “graduated” lock-up structure, which would permit insiders to sell a limited number of shares incrementally during the lock-up period rather than waiting for it to expire entirely. Nothing about this is guaranteed, and the specifics will depend entirely on what SpaceX and its underwriters negotiate — but it’s worth knowing these structures exist.
And it doesn’t stop there. Even after the lock-up expires, public company employees face blackout periods or windows around earnings releases and major corporate events where insiders can’t trade. In practice, this can limit your ability to sell to just a few weeks per quarter.
Bottom line: An IPO is not a cash-out event. It’s the beginning of a new, more complex planning phase.
This is true for current employees and it likely applies to former employees too. If you left SpaceX within 6 to 12 months of an IPO, assume the lock-up restriction applies to you unless compliance tells you otherwise.
2. Should I be exercising my ISOs before the IPO happens?
This is where strategy really starts to matter and where waiting too long can cost you significantly.
When you exercise ISOs while SpaceX is still private, you don’t pay ordinary income tax right away. But the spread between your strike price and the current fair market value counts as income for AMT purposes, the Alternative Minimum Tax. Exercise too much in one year and you can trigger a six-figure tax bill before you’ve received a single dollar of liquidity.
Here’s a simple example: Say your strike price is $10 and the FMV is $100. Exercise 10,000 shares and you’ve just created a $900,000 AMT adjustment and potentially a $200,000 to $300,000 tax bill to be paid before you’ve sold anything.
The good news? With the right approach, you can manage this. Some strategies we work through with clients:
- Exercising in smaller increments across multiple tax years to stay below AMT thresholds
- Coordinating exercise timing with other income events to reduce your overall tax exposure
- Holding exercised shares for the qualifying disposition period (one year post-exercise, two years from grant) to access long-term capital gains rates
The key is that none of these decisions should happen in a vacuum. ISO exercises, income planning, and liquidity timing all affect each other and the window to plan strategically is before the IPO, not after.
3. What’s the tax exposure I should actually be preparing for?
Tax complexity is probably the #1 reason SpaceX employees come to us. The equity compensation at SpaceX isn’t simple and most general financial advisors don’t fully understand how it works.
Here’s a quick breakdown of how each equity type is taxed:
ISOs (Incentive Stock Options)
- No ordinary income tax at exercise but the spread triggers AMT
- Qualifying disposition (held 1+ year after exercise, 2+ years from grant): taxed at long-term capital gains rates
- Disqualifying disposition: taxed as ordinary income
NQSOs (Non-Qualified Stock Options)
- The spread at exercise is treated as ordinary income and it shows up on your W-2
- Exercising a large amount in one year can push you into a higher tax bracket
- Future appreciation after exercise is subject to capital gains tax
RSUs / SAUs (Restricted Stock Units / Stock Award Units)
- Taxed as ordinary income when they vest, based on FMV at vesting
- Appears on your W-2 like a cash bonus
- Future gain or loss after vesting is capital gains
The real risk isn’t any one of these in isolation, it’s when multiple events happen in the same tax year. Exercise ISOs, have RSUs vest, and sell shares all at once, and you could be looking at a tax bill that far exceeds what you expected.
The people who do best around an IPO are the ones who coordinate exercises, income, and sales across multiple years — not the ones who make all their moves at once.
4. Should I sell everything as soon as I can, or hold my SpaceX shares?
This is the concentration risk question and it’s one we spend a lot of time on with clients.
Most SpaceX employees we work with have somewhere between 60% and 95% of their net worth tied up in company equity. That’s not unusual for someone who’s been at a high-growth private company for several years. But it does create a specific kind of financial risk.
When your career, your cash flow, and your net worth are all connected to one company, any disruption such as a delayed IPO, a valuation shift, a tough year affects everything at once.
That said, the answer isn’t simply “sell everything as fast as you can.” SpaceX has been one of the most remarkable wealth-creation opportunities in a generation. Walking away from all of that upside isn’t necessarily the right move either.
What we help clients think through is a staged approach:
- Use tender offers and IPO liquidity windows to gradually convert paper wealth into real, invested assets
- Diversify into a portfolio that’s not correlated to SpaceX’s performance
- Fund specific near-term goals like home purchases, emergency reserves, retirement accounts, with proceeds from equity sales
- Maintain a meaningful position in SpaceX if that aligns with your long-term view
Diversification isn’t a bet against SpaceX. It’s a way to protect the wealth you’ve already earned.
5. What happens to my equity if I leave SpaceX before the IPO?
This question matters more than most people realize and the stakes are high.
When you leave SpaceX, you typically have 90 days to exercise your vested ISOs. If you don’t act within that window, those options expire. They’re gone.
That 90-day clock creates real pressure. You may need to come up with the cash to buy the shares, pay AMT on the spread, and make a high-stakes financial decision, often during an already-stressful career transition.
For NQSOs, you’ll also typically have a short post-termination window, and exercising will immediately trigger ordinary income tax. For RSUs, anything unvested at departure is generally forfeited.
We work with clients who are considering leaving SpaceX in the next 12 to 24 months to build a plan before they go, not after. That means:
- Mapping out what equity is vested versus unvested and understanding what’s at risk
- Evaluating whether to exercise ISOs gradually while still employed
- Aligning departure timing with upcoming tender offers or vesting cliffs when possible
- Stress-testing the tax impact of exercising before exit
The earlier you plan, the more options you have. If you wait until you’ve already put in notice, your choices narrow quickly.
Ready to Map Out Your SpaceX Equity Strategy?
Every SpaceX employee’s situation is different…different grant dates, different strike prices, different tax situations, and different goals. There’s no one-size-fits-all answer here.
What we offer is a free 30-minute Discovery Call. A one-on-one conversation to walk through your specific equity, tax exposure, and what a smart strategy could look like for you going forward.
Schedule your free Discovery Call at babinwealth.com/spacex
Whether you’re years from a liquidity event or watching the IPO news closely, the right time to build a plan is before things start moving quickly.