A tiny free float makes an IPO price a fiction: with only ~3% of shares released (per Mellon, SpaceX 2026), scarce supply meets maximum hype and the print reflects neither fundamental value nor the clearing price for the real share count. The overhang then arrives on schedule — lockup expiries and insider unlocks, typically clustered around the first earnings reports — and the marginal seller changes from nobody to everybody at once. Mellon’s version: “a huge outflow of unlocked shares as soon as he produces his first quarterly results.”
The general rule: for recent listings, know the float, the lockup calendar, and who is waiting to sell before trusting the chart — the price history of a 3%-float stock is not evidence about the other 97%. (Mellon is short SpaceX and talking his book; the float mechanics are true regardless — see Underwriter research conflict for the other half of his argument.)