On June 12, SpaceX is expected to begin trading on Nasdaq in one of the largest IPOs in history. For thousands of employees, after years of hard work and deferred compensation, their equity will suddenly have real, liquid value.
An IPO is one of the most significant financial events in an employee's life. It's exciting, and it's easy to make decisions you'll regret.
It turns out that for most employees, the IPO itself isn't decision day. Thanks to lockups, the real decisions come weeks or months later. That window is valuable. It gives you time to plan with a bit of distance from the adrenaline-fueled emotions that lead up to the big event.
Most of the advice floating around focuses on when to sell, how much to sell, and what to do with the proceeds. That's all important. But there's a dimension most employees miss entirely, and it's one I wish someone had spelled out more clearly for me when LinkedIn went public in 2011.
Whether you work at SpaceX or at any company that has recently gone public, here are three things worth thinking through before you sell a single share:
- Don’t panic. You have more time than you think.
- The easiest way to lower taxes is to be generous.
- Giving is a marathon, not a sprint. Pace yourself.
Don’t panic. You have more time than you think.
Sage words of wisdom from Douglas Adams: Don’t Panic.
Even the most resolute stoic will find it hard to avoid the roller coaster of emotions that surrounds an initial public offering, especially at modern scale. The combination of intrinsic emotions, stemming from years of personal investment of time and energy, with the media circus and attention from friends, family, and millions of strangers is truly a perfect storm of emotional stimulation.
Fortunately, you have time.
When it comes to an IPO, there are decisions that need to be made before the IPO date, and decisions that can wait until the lockup expires. That typically means you have months after the big day. Slow things down, know your key dates, and seek high-quality advice on key decisions.
Lockups used to be very standard, 180 days after the IPO. In recent years, they have become more complicated, with milestones and triggers that can unlock selling for subsets of shareholders.
Know the dates, and plan around them. Key questions to ask:
- Does your company allow you to sell a percentage of shares into the IPO? If so, that decision often has to be made weeks in advance of the IPO.
- When, exactly, does the lockup expire?
- Does your company have blackout dates? If so, find out what they are, as they will impact your ability to sell after the lockup date. Some companies might require you to have a 10b5-1 plan, a formally declared selling plan that can only be created outside of any blackout dates.
Of course, the most important date might be the simplest: December 31.
Any sales made in 2026 will affect taxes owed for the year, and there are a lot of topics that can impact your selling plan from a tax perspective. Estimated taxes. Options vs. RSUs. and ISOs vs. NQSOs.
The calendar year matters, and the IRS is notoriously inflexible about it.
For people who have always filed taxes themselves, there can be resistance to seeking professional help. It seems expensive, and when you don’t know what you don’t know, it’s easy to rationalize doing it yourself. Don’t make that mistake.
Professional advice can be critical to navigating the year, and while there is significant value in having access to a financial advisor and an estate attorney, first and foremost, consider hiring a high-quality accountant.
The easiest way to lower taxes is to be generous.
Here's the advice almost nobody gives, and the one that made the biggest difference for me personally. Be generous. Donate shares to charity.
To be explicit: every time you decide to sell shares, consider donating a few of them as well.
When you donate appreciated shares, you win three ways:
- A charitable deduction for the full fair market value of the shares
- No capital gains taxes on the appreciation, for you or the charity
- Tax-free growth on the money until you give it away
If you regularly give or plan to give to charity, whether it’s your alma mater or your children’s school, it almost always makes sense to donate stock instead of cash.
Applying this insight is fairly simple. Any time you are considering a sale of shares, run the numbers on what happens if you sell 90% of that amount, and donate 10% of the shares to a donor-advised fund (DAF). In most cases, you will find that this can save you a huge percentage of the taxes you would otherwise owe. You’ll see your tax bill decrease, and you’ll have more money available for you and your charitable giving than if you'd sold everything and made donations later.
During the LinkedIn IPO, my accountant advised me to estimate my annual giving plans, and then multiply by 10 to estimate the amount of stock to put in a donor-advised fund. It turned out to be as simple as just taking 10% of my annual salary, and then multiplying that by 10.
Back then, platforms like Daffy didn’t exist yet. Now, you can donate shares and recommend they be held rather than sold right away, which means your charitable plans can participate in your company's growth, too.
It’s a no-brainer.
Giving is a marathon, not a sprint. Pace yourself.
Some therapists believe that a large windfall can be so emotionally disruptive that it can produce trauma-like stress reactions. There’s even a term for it, “sudden wealth syndrome,” and it includes psychological distress including anxiety, depression, insomnia, social isolation, and even an identity crisis.
Imagine trying to make significant life decisions in the midst of that emotional rollercoaster.
The secret is, for the most part, you don’t have to. You can give yourself the gift of time.
The decision to set money aside for charity and get a tax deduction has a deadline of December 31. The decision of when to give it all away doesn't, and shouldn't.
An IPO doesn't just change your giving capacity. It changes your financial situation and so much more. You're suddenly weighing how quickly to diversify out of a concentrated stock position, whether to buy a home or make improvements you couldn't have made before, how to fund your children's education, whether you finally need an estate plan, whether to help your parents or siblings — a dozen opportunities and decisions that weren't possible before. Your giving strategy has to find its place among all of them, and that takes time.
What we see at Daffy is that most donors keep supporting the causes they already care about. What takes longer is figuring out what their giving should look like at this new level of wealth and giving capacity. They want to be intentional. They simply aren't comfortable going from making $500 donations to $50,000 overnight.
A DAF simply gives you time to expand to new causes as you discover them, and deepen support for the organizations you already give to.
It's also better for the organizations you support. Sustained, predictable giving through recurring donations lets nonprofits plan and build in a way that one-time donations can't.
For more on this topic, check out this guide from our VP of Philanthropic Services, "Building a Giving Practice That Reflects Your Values."
The IPO is the starting line, not the finish line.
The SpaceX IPO is unprecedented. At a $1.75 trillion valuation, assuming employees hold roughly 12% of the equity, that's over $210 billion in employee hands in the coming months. If the average employee set aside just 10% of the shares they plan to sell, a smart move given the taxes they'll otherwise face, that would represent more than $21 billion committed to charity from a single company.
Selling company stock is a major financial milestone for any employee or investor. With a little planning, it can be a philanthropic one too.
The information on this page is for educational purposes only and should not be considered tax or investment advice. Any calculations are intended to be illustrative and do not reflect all of the potential complexities of individual tax returns. Please consult a tax and/or investment professional to assess your specific situation.