A multistream instability is observed experimentally during the longitudinal expansion of an electron beam in a storage ring. The instability is observed when the beam expands in length to several times the circumference of the ring so that portions of the beam overlap. While portions of the beam overlap in physical space, they form multiple streams and remain separate in velocity space. The streams become unstable as their number increases and their separation in velocity decreases. An analytical theory predicts the onset of the instability, in agreement with simulations and measurements, over a wide range of peak line-charge densities (10.3 pC/m–1.8 nC/m) and bunch lengths. This work extends previous calculations to include the dynamic nonlinear elongation of the bunch, with a given initial length, and defines an onset criterion for the filament velocity separation for the beam to be unstable.