When One Stock Becomes Most of Your Net Worth, What Should You Actually Do?
SpaceX went public on June 12, 2026, at $135 a share. For thousands of employees who have been holding paper equity for years, the question that has been theoretical until now just became real: a position that only existed on a cap table is about to become something they can actually sell. And for a lot of them, that single position is the vast majority of their net worth.
This is the concentration problem, and it is one of the most consequential and most poorly handled situations a high earner ever faces. A concentrated position is any single holding that makes up a large enough share of your wealth that its movement, up or down, materially changes your financial life. There is no official cutoff, but once one stock crosses roughly 10% to 20% of your investable assets, you are making an active bet whether you think of it that way or not.
SpaceX is the example in the headlines right now, but the situation is not specific to rockets (though most of the wealth was created by rocket-like growth 😉). It is the same math for the early Stripe employee, the founder who just sold to private equity, the physician who put serious money into a practice, and the attorney whose biggest asset is a partnership stake. What follows is how to think about the position itself, what the SpaceX lockup actually allows, and the tax mechanics that quietly decide how much of the gain you keep.
Why Is a Concentrated Position Actually Risky?
The risk is not that the stock might go down. The risk is that a single company controls an outsized share of your future, and you are not being paid extra to take that bet.
Here is the part that gets missed. Over long stretches, a concentrated position in a great company can absolutely outperform a diversified portfolio. Nobody who held early SpaceX equity is upset about it. And lots of the great wealth that has been created has been because of concentration. But that is survivorship talking. For every concentrated position that made someone wealthy, there are many that quietly destroyed the gain, and you only hear about the first kind. Academic research on long-term stock returns has found that a small minority of companies generate the bulk of all market wealth creation, while the median individual stock underperforms cash over its lifetime. Concentration is a bet that you are holding one of the few winners, with your own financial security as the stake.
The second issue is correlation you do not see. If you work at the company, your salary, your bonus, your unvested equity, and your liquid net worth are all tied to the same business. A bad year for the company is not just a portfolio drawdown. It can be a layoff and a falling stock price arriving in the same month. That is the risk of concentration, and it is the situation a lot of SpaceX employees are in right now.
None of this necessarily means selling everything on day one. It means being honest that holding is an active decision, not a default. "I never sold" is a choice with the same weight as "I sold." Most people only treat one of them as active.
What Does the SpaceX Lockup Actually Let Employees Do?
The lockup means most employees cannot sell on day one, and the schedule is unusually staggered, so the real planning question is timing, not just whether to sell.
A lockup is a contractual restriction that prevents insiders and employees from selling shares for a defined period after an IPO, so a flood of insider selling does not overwhelm the stock right out of the gate. The standard is a single 180-day cliff. SpaceX did something more complicated. According to the company's S-1, the 180-day period is broken into staged early releases.
Based on the disclosed terms, the first meaningful window opens after SpaceX reports its first quarterly earnings as a public company, the quarter ending June 30, with that report expected sometime between mid-July and September. At that point, up to 20% of eligible locked shares can be sold. There is a performance kicker: if the Class A shares trade at least 30% above the IPO price on five of ten consecutive trading days before that first earnings release, an additional 10% can unlock early. After that, smaller tranches of roughly 7% become sellable at 70, 90, 105, 120, and 135 days post-IPO. A larger release of up to 28% follows the second earnings report, and all remaining restrictions lift at the 180-day mark, around mid-December. Worth noting: Elon Musk himself is not part of the early-release schedule, with his shares locked up for 366 days.
The practical takeaway is that employees do not face one decision. They face a sequence of them spread across roughly six months, during which the stock can move a great deal. That is not a reason to wait and hope, and it is not a reason to dump every share the moment a window opens. It is a reason to decide your plan before the first window, not during it.
How Do Taxes Decide How Much of the Gain You Keep?
Taxes often determine the after-tax outcome of a concentrated sale more than the sale price does, because the difference between short-term and long-term treatment is enormous.
Here is the distinction that matters most. Shares held for one year or less are taxed at ordinary income rates, which top out at 37% federally (in addition to state taxes). Shares held longer than a year qualify for long-term capital gains rates of 0%, 15%, or 20%. For 2026, the 20% rate applies once taxable income crosses $613,701 for married couples filing jointly ($545,501 single). On top of that sits the net investment income tax, a 3.8% surtax on investment income once modified adjusted gross income exceeds $250,000 married filing jointly or $200,000 single. Those NIIT thresholds have not been adjusted for inflation since 2013, which is why more high earners cross them every year. Stack it together and the real top federal rate on a long-term gain is 23.8%, before any state tax.
For equity compensation, the holding-period clock and the type of grant (ISOs, RSUs, NSOs) change the answer significantly, and the alternative minimum tax can enter the picture with incentive stock options. The details are specific to each grant, which is exactly why this is worth modeling before you sell rather than discovering it on a return.
Consider a hypothetical. Imagine an engineer named Priya who holds SpaceX shares now worth $2 million, with a very low cost basis. If she sells a large block this year as a short-term gain, a meaningful slice could be taxed as ordinary income near the top bracket. If the same shares qualify as long-term and she spreads sales across two tax years to manage which bracket the gains land in, the after-tax result can differ by a six-figure amount on the identical position. The share quantities did not change, but the sequencing did.
At Lotus Asset Management, situations like this are why we look at the tax picture before any shares are sold. Once a gain is realized, most of the planning options are gone. It’s not “too late” to do anything, but it’s almost always “too late” to optimize. And that’s our ultimate goal.
What Should Someone in This Position Do First?
Start by separating two questions that usually get tangled: how much concentration risk you are comfortable carrying and how to exit efficiently if you decide to reduce it.
On the first question, the honest answer depends on the rest of your financial picture. If your concentrated position is 70% of your net worth and you have a mortgage, young kids, and no other meaningful savings, you are carrying risk that has nothing to do with your conviction in the company. If the same position is 15% of a well-built portfolio and you could lose all of it without changing your retirement, holding is a far more reasonable choice. The number that matters is not how much you believe in the stock. It is how much of your life depends on being right.
On the second question, there are more tools than most people realize, and several only work before a sale: spreading sales across tax years, coordinating with charitable giving, harvesting losses elsewhere in the portfolio to offset gains, gifting stock early to a trust or family, and in some situations using structures designed to diversify a concentrated position over time. None of these are necessarily “exotic”, and none of them are one-size-fits-all. They require knowing your full tax picture, your other holdings, and your actual goals before anything is sold.
The mistake we see most often is treating the liquidity event as a single moment that requires a single decision. It is not. It is a multi-year process that happens to start well before the IPO.
The Bottom Line
A concentrated position is a bet, and holding is as much a decision as selling. The right amount of concentration depends on how much of your financial security is riding on one company, not on how much you like it. And the tax treatment, especially the gap between short-term and long-term rates and the staggered lockup windows, often decides the after-tax outcome more than the share price does.
If a meaningful share of your net worth is tied up in one company, whether it is SpaceX, a recent acquisition, or a private business, the most valuable planning happens before you sell, not after. It is worth a conversation with your advisor while you still have every option available.
Frequently Asked Questions
Q: How much of my net worth in a single stock is too much?
A: There is no official threshold, but once one position exceeds roughly 10% to 20% of your investable assets, you are taking on meaningful single-stock risk. The right level for you depends on the rest of your financial picture: a position that is 15% of a diversified portfolio is very different from one that is 70% of everything you own. The question is how much of your financial security depends on that one company performing well.
Q: When can SpaceX employees actually sell their shares after the IPO?
A: Based on the terms in the company's S-1, most employees face a staggered 180-day lockup rather than a single end date. The first meaningful window opens after SpaceX reports its first quarterly earnings as a public company, expected between mid-July and September 2026, when up to 20% of eligible shares can be sold. Additional tranches release on a schedule running through roughly mid-December, with specific terms that depend on your grant and status.
Q: What is the difference between selling shares held short-term versus long-term?
A: Shares held one year or less are taxed at ordinary income rates, up to 37% federally. Shares held longer than a year qualify for long-term capital gains rates of 0%, 15%, or 20%, plus a possible 3.8% net investment income tax for high earners. That difference can change your after-tax result substantially on the same position, which is why holding period and sale timing are worth planning before you sell.
