3 Costly Mistakes to Avoid as Your SpaceX Shares Unlock
I'm Michael Walstedt, a fee-only wealth advisor at Reliant Wealth Advisory, based in Hoboken, NJ. I work with tech employees on equity compensation, IPOs & concentrated stock decisions. Click here to book a free strategy session.
This is the week SpaceX stock stops being a number on a screen.
About 1.3 billion shares become eligible to sell on Thursday, two trading days after third-quarter earnings. Another 319 million or so unlock this weekend and can trade Monday. By the end of it, more than 80% of the employee and early investor lockup pool is free.
This can be significant wealth for most of the people who're involved. It's also the moment when a few avoidable mistakes get very expensive. Here are the three I'd watch for most, plus a bonus for anyone eyeing a move out of California:
Mistake 1: Spending money that already belongs to the IRS
If your RSUs settled around the IPO in June, that value was taxed as wages, and the withholding was almost certainly too low. Companies typically withhold federal tax at a flat 22% up to $1 million. In the 35% bracket, that's a 13-point gap on every dollar.
Say $800,000 of RSUs settled for you this year. About $176,000 was withheld. Your actual federal bill is closer to $280,000. That's roughly $104,000 due in April, no matter what the stock does in the meantime. Hawthorne employees can owe more on top of that, since California's top rate is above 13%.
The fix: before you sell a share for anything else, figure out what you'll owe and set it aside. Ask your CPA about a fourth-quarter estimated payment, due January 15.
Mistake 2: Paying tax twice on the same shares
This one catches people every IPO year, and most never realize it happened.
When your RSUs settled, their full value was taxed as income on your W-2. That value is your cost basis. But the tax form your broker sends after you sell, the 1099-B, often reports a cost basis of $0 or one that's far too low.
If nobody fixes it, your tax return treats the entire sale as profit. Sell $500,000 of shares that settled at $500,000, and instead of roughly zero gain, you could be taxed on a $500,000 "gain." In the 35% bracket, that's about $175,000 in tax on money you already paid tax on.
The fix is an adjustment on Form 8949 using the supplemental statement from your broker. It's simple once you know to look for it. Most people don't.
Mistake 3: Deciding in the moment
This week, the price will move and your group chat will have opinions. That's the worst setting for one of the biggest financial decisions of your life, and it usually pushes people to an extreme: sell everything out of fear, or hold everything because selling feels disloyal.
Rushing also leads to a quieter, expensive mistake: selling the wrong shares. If you've been at SpaceX a while, you may own shares with very different tax treatment. Options you exercised years ago have a low cost basis and qualify for long-term rates. RSUs that settled at the IPO have a high basis and are short-term. Brokers usually default to selling your oldest shares first, which can be the most heavily taxed choice. Picking specific lots instead can change your tax bill dramatically.
The fix: decide before the price moves. Write down what the money needs to do, sell enough to cover it, choose which shares to sell on purpose, and hold the rest as your bet on the company. A 10b5-1 plan can put it on autopilot. And check your trading window, since the lockup ending doesn't mean you can sell yet.
Bonus: The California move trap
Plenty of Hawthorne employees are thinking about moving to Texas or Florida to escape state income tax. Moving can help with gains on shares you sell later. But California can still tax equity you earned while working there, including RSUs that vest or options you exercise after you leave, based on how much of that time you worked in the state. Plan the move before assuming the tax disappears.
The bottom line
You spent years building this. Do you really want to “wing it”?
The next unlock comes around December 8, so there's still time to put an actual plan in place. If you'd like help running your numbers, I offer flat-fee, ongoing advisory relationships for SpaceX employees navigating the unlock and everything that comes after it. Click here or find some availability below to book a free strategy session
About the Author
I'm Michael Walstedt, a fee-only wealth advisor at Reliant Wealth Advisory. I work with tech employees on equity compensation, IPOs, and concentrated stock decisions.
This article is for educational purposes only and is not tax, legal, or investment advice. Unlock dates and share counts are based on public reports of SpaceX's IPO prospectus. Tax examples are simplified and depend on your situation. Consult a qualified tax professional.
