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SpaceX shares are falling because the first burst of IPO buying is fading and traders are already looking at a much larger supply of stock coming later. The price dropped 3.57% on Thursday, after a 5% loss on Wednesday.
That ended a wild stretch that pushed the company into the top tier of global market values only days after its listing. The stock still trades far above its offer price, but the easy early rally has clearly lost speed.
With SpaceX’s IPO valuation being $135 per share last week, even with the recent fall in value, the stock is still almost 37% above that. With an increase of 37%, the stock will trade around $185, which means a premium of about $50 compared to the IPO pricing. The stock has also appreciated by almost 15% so far this week until the US markets shut down in observance of Juneteenth.
The Thursday market, therefore, becomes the last trading day of the week, with investors having to consider SpaceX’s low float, options market congestion, high valuation, and lock-up expiration after earnings announcement.
Stock traders prepare for new SpaceX share supply as options wagers clog the market
There are only approximately 640 million SpaceX shares which can be sold publicly right now. The number of shares which SpaceX has in general is around 13 billion, so the float is less than 5%. It means that there are 12.36 billion shares which cannot be sold right now.
That low float helped SpaceX generate price spikes in the days following its IPO since there were not many shares on the market.
The number of tradable shares will increase once SpaceX publishes its second-quarter earnings. The share price at that point will affect the size of the first unlock. Either 20% or 30% of locked shares will become eligible for selling once the earnings are published.
Unlocking of other shares is expected during the rest of this year. Those dates will give another opportunity to sell positions which currently cannot be sold.
There are also options traders who are speeding up every single day. Thursday was just the third day of options trading on SpaceX stock, but the volume hit 1.26 million contracts. It means that there were an equal number of calls and puts traded – each type has approximately 630,000 contracts.
The majority of this activity was accounted for by daily contracts, which were just introduced. The most active were the contracts expiring on June 18, with around 726,000 contracts traded pre-market. The June 18 options made up more than 58% of the total SpaceX options traded during the day.
The use of same-day contracts proved the fact that short-term speculation has turned into a key element of trading at SpaceX.
Data from Susquehanna Investment Group placed SpaceX third among all stocks for options activity. Only Nvidia (NASDAQ: NVDA) and Tesla (NASDAQ: TSLA) finished ahead of it.
Sellers cut the valuation as SpaceX reshapes its board, and control stays with Elon
This Tuesday, SpaceX became more valuable than Amazon (NASDAQ: AMZN) by market value. This surge made Elon Musk’s rockets and artificial intelligence company one of the most valuable companies in the world, measured by its market capitalization.
But this state of affairs did not stay for long. On Thursday, SpaceX lost its position and became worth only $2.44 trillion. Amazon closed on Thursday at $2.62 trillion and took the top spot again. Thus, Amazon ended up Thursday about $180 billion more valuable than SpaceX.
The change of the board came right one day before Thursday. Roelof Botha, who is a close friend and ally of Elon Musk, joined SpaceX’s board as an independent director. At the same time, he became a member of the audit committee.
This move increases the board size to eight people. Elon Musk stays chairman, CEO, and CTO. Elon owns stocks worth more than $1 trillion and controls over 82% of voting rights in the company.
Such a voting system makes outsiders have very limited powers concerning big decisions despite the trading of the company publicly. However, the arrival of Roelof increased the number of independent directors, but did not reduce the control of Elon.
Elon also gave investors a new long-term number on Sunday. Posting on X, he said SpaceX “might be able to reach approximately” $1 trillion in revenue in 2030. The statement arrived while the stock was still climbing from its record-setting debut and before the two-day pullback began.
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