SpaceX shares have fallen 33% from their record peak and are trading near their $135 IPO price. Investors are cautious as a major lockup period ends in early August, which could allow the sale of over 911 million additional shares. This upcoming supply increase and the company's high valuation remain key areas for market attention.
SpaceX is experiencing a period of stock market pressure as its share price has declined 33% from its record closing level. On Wednesday, the stock traded as low as $132.15, dipping below its initial public offering price of $135, before recovering slightly to close at $135.27. This performance reflects a change in investor sentiment following the company's high-profile debut.
Upcoming Lockup Expiry and Share Supply
A primary factor contributing to the current volatility is the approaching expiration of lockup agreements in early August. These agreements currently prevent certain insiders, employees, and early investors from selling their holdings. Once these restrictions lift, up to 911.5 million shares could become eligible for trade. Based on current market prices, this potential influx of supply is valued at approximately $123 billion, which is significantly larger than the $86 billion worth of shares currently circulating in the market. Historically, such expansions in tradable supply can lead to increased price swings if many holders decide to sell simultaneously.
Valuation and Financial Context
Despite the recent decline, SpaceX continues to hold a substantial market capitalization of roughly $1.8 trillion. The company currently trades at a price-to-expected-revenue multiple of 49. For context, this valuation is higher than that of Tesla, which trades at a revenue multiple of 15.
From a financial perspective, the company’s valuation remains a point of debate among market observers. SpaceX reported a net loss of nearly $5 billion in the previous year. However, many supporters emphasize the growth potential of the Starlink satellite internet service and the company's steady stream of government launch contracts. While a majority of the 32 analysts covering the company maintain a positive outlook, the gap between the current valuation and the company's bottom-line performance is a factor that some investors consider when evaluating their positions.
Historical Trends and Next Steps
Data from past major U.S. IPOs suggests that companies whose shares fall below their initial listing price within the first two months often face performance challenges compared to those that stay above that level. Investors are now focused on the early August date when the lockup period ends. The market impact will largely depend on how many insiders choose to sell their shares and how much new demand emerges to absorb the increased supply. Monitoring daily trading volumes and any official disclosures regarding insider sales will be the most relevant next steps for those tracking the stock.