SpaceX’s wild ride is just getting started
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NEW YORK -- SpaceX’s stock extended its wild ride on Tuesday, briefly falling below its first-day opening price before rebounding on an otherwise weak day for the tech sector – sharpening Wall Street’s focus on the shifting balance between buyers and sellers of the volatile shares.
Shares of Elon Musk’s rockets-and-AI firm have surged as much as 67 per cent since they started trading on June 12 and fallen 35 per cent from there. But those swings don’t likely represent a fundamental shift in investors’ views on SpaceX’s prospects and valuation, analysts said, given the flood of information that preceded its record US$75 billion IPO and the silence that has followed.
That will change in coming days. SpaceX’s addition to major indexes and the start of research coverage by major investment banks is likely to fuel more buying, while the expiration of share lockups could drive potential selling, analysts said.
Options-market activity has grown more defensive, with more investors betting on potential share declines after an initial bout of euphoric buying of SpaceX. Often, automatic sell orders cluster around specific milestones, with some identifying the June 12 opening price of $150 and the $135 IPO price as potential pain points.
Tuesday was another up-and-down day for the stock. Shares were lately up five per cent at $162.80, after earlier trading as low as $147.11 amid a broader Nasdaq selloff.
“If these levels hold, it will be viewed optimistically as a ‘test’, but if they break, it could mark a sentiment shift for the more high-flying areas of the market,” Bespoke Investment Group said in a note on Tuesday.
SpaceX’s selloff in recent days has been accompanied by the biggest tech pullback in several weeks, with Nvidia dropping back below $5 trillion in market value on Tuesday and hundreds of billions of dollars being knocked off the Nasdaq composite index.
Red-letter days for SpaceX
A series of SpaceX events will drive trading in coming days and weeks.
Investors said some of the developments are likely to be bullish, such as index additions, but that it’s impossible to say how any of them will affect trading given the many factors that drive securities pricing, particularly in a hot market such as for AI-related shares.
- SpaceX is expected to be added to Russell indexes as part of FTSE Russell’s regular index reconstitution on Friday. That could result in $2.68 billion in inflows from passive investors
- June 29: Scheduled 13th flight of SpaceX Starship
- July 6: Expected addition to the Nasdaq 100 index
- July 7: End of quiet period that limits publication of research by investment banks involved in the IPO
- SpaceX’s inclusion in ETFs like the Invesco QQQ Trust and iShares Russell 1000 ETF, which are tied to the Nasdaq and Russell indices
The addition to those ETFs has been anticipated by the market, said Todd Rosenbluth, head of research and editorial at TMX VettaFi, an ETF market analysis firm.
“However, these ETFs will still be buyers on the day of inclusion, providing some demand for the stock,” he said, as index funds, unlike active managers or individual investors, cannot trade far in advance.
Options bets go both ways
Investors’ initial rush to get exposure to SpaceX through bullish options bets has given way to more two-way action in that market, as some traders brace for the stock to slip below its IPO price in the coming months.
“The options activity has gotten more balanced. It’s not as completely euphoric as it was day one,” said Steve Sosnick, chief strategist at Interactive Brokers.
Options data show traders ascribing an about 40% probability to the stock trading below $130 by mid-September, according to Susquehanna Financial Group strategist Christopher Jacobson.
While in aggregate SpaceX options still show a slight bullish bias, contracts expiring July through September with strike prices ranging from $125 to $190 show nearly two puts for each open call, according to LSEG data, pointing to defensive positioning. Calls convey the right to buy shares at a fixed price in the future and puts offer the right to sell them.
“I don’t think this is unusual given the performance of hot IPOs in the immediate term post offering and the need for hedges surrounding unlock periods,” said Ophir Gottlieb, chief executive of Capital Market Laboratories, who has been invested in SpaceX since a funding round in 2022.
While most newly public companies impose broad restrictions on insider sales for roughly six months after listing, SpaceX has created exceptions for some participants and plans a phased release of restricted shares tied partly to company performance and stock-price targets. Some shareholders could begin selling stock shortly after SpaceX reports its first quarterly earnings , provided specified conditions are met.
(Reporting by Saqib Iqbal Ahmed and Lewis Krauskopf in New York; Writing by Colin Barr)
SpaceX sheds $600 billion in three days as it taps the bond market for the first time
SpaceX shares have fallen for a third straight session, sinking to their lowest level since the firm's market debut and wiping out most of the spectacular gains made after its IPO, just as it launches its first-ever bond sale.
SpaceX shares closed at $154.63 on Monday, down around 16% on the day. That leaves them within touching distance of the $150 at which the shares first changed hands when public trading opened, the level set once underwriters finished building the order book, though still some way above the $135 price at which the IPO itself was struck.
The slide has erased more than $600 billion (€524.2bn) in market value over three trading days, dragging the company down from a peak that had lifted it past Amazon and, fleetingly, Microsoft, in terms of market capitalisation.
Its valuation now sits just above $2 trillion (€1.74tn), below Taiwan Semiconductor Manufacturing Company (TSMC), making it the seventh most valuable company in the world.
The retreat unwinds a remarkable opening run.
After the open at around $150 on 12 June, shares climbed to almost $226 by 16 June, a gain of roughly two-thirds before the company had published a single set of results as a public firm.
Currently, SpaceX is trading over 30% lower than the intraday high of around $226 and only 3% higher than the opening price.
That rally always rested on a thin pool of freely traded shares and lofty expectations for its AI ambitions, leaving it exposed to a sharp reversal once sentiment turned.
Tapping debt to fund the AI push
The latest leg down on Monday coincided with SpaceX's first move into the corporate debt market.
The company announced an inaugural offering of senior unsecured notes, with people familiar with the plans reportedly putting the target at around $20 billion (€17.4bn).
The proceeds are earmarked chiefly to repay a bridge loan taken on during its merger with Elon Musk's AI venture xAI earlier this year, with the remainder going to general corporate purposes.
The debut bond sale follows the investment-grade credit ratings awarded last Friday by all three major agencies, Moody's at Baa1, Fitch at BBB+ and S&P Global at BBB, which open the door to cheaper borrowing and a wider pool of institutional lenders.
In documents tied to the offering, SpaceX also disclosed a cash position of roughly $100.8 billion (€88bn) as of 19 June, much of it raised in the IPO, alongside $29.1 billion (€25.4bn) of long-term debt.
That mix of vast cash reserves and fresh borrowing so soon after a record flotation has unsettled some investors, who see the rapid fundraising as a sign of heavy spending ahead as SpaceX scales its AI and data centre plans.
Opting for debt rather than new shares does, however, spare existing shareholders further dilution, preserving their economic stake while the company funds its expansion.
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