SpaceX shares briefly fell below their initial public offering (IPO) price on Wednesday, raising concerns that the stock could face additional pressure in the coming weeks as restrictions on insider share sales begin to expire.
The stock dropped to as low as $132.15 during trading before recovering to close at $135.27, slightly above its IPO price of $135 per share. Since reaching record highs in the days following its June 11 market debut, SpaceX shares have fallen about 33%.
Despite the decline, the aerospace and satellite company remains one of the world’s most valuable publicly traded firms, with a market capitalization of approximately $1.8 trillion.
SpaceX’s IPO, which raised a record $75 billion, was the largest in U.S. history. However, the company made less than 5% of its total shares available for public trading, creating limited supply that helped push its valuation to $2.1 trillion after its first day on the Nasdaq.
Market attention is now turning to the expiration of lockup agreements that have prevented insiders, employees and early investors from selling their holdings.
Jay Hatfield, chief executive of Infrastructure Capital Advisors, said investors should remain cautious ahead of the upcoming lockup expiry.
“We think at this level, it’s relatively safe to at least be involved from a trading perspective,” Hatfield said. “We won’t overweight it because they do have the lockup coming.”
The first major release is expected shortly after SpaceX reports its first quarterly earnings as a public company, which analysts anticipate will occur in early August. At that point, approximately 911.5 million shares held by employees and certain early investors could become eligible for trading.
Based on current prices, those shares are valued at around $123 billion, exceeding the roughly $86 billion worth of shares currently available for trading on the Nasdaq. The increase in supply could create additional volatility if a significant number of shareholders decide to sell.
Another 455.8 million shares may also become eligible for sale if SpaceX’s stock remains above $175.50 for at least five of the 10 consecutive trading days leading up to its earnings report.
By December 8, the amount of SpaceX stock available for public trading could increase to about 40% of the company. The remaining 60%, including Elon Musk’s stake, is expected to remain under lockup until mid-2027.
Even after the recent selloff, SpaceX continues to command one of the highest valuations on Wall Street. The company currently trades at about 49 times expected revenue, compared with roughly 15 times revenue for Tesla.
Supporters argue the premium reflects the strength of SpaceX’s Starlink satellite internet business, its government launch contracts and investor confidence in Musk’s long-term vision, despite the company reporting a net loss of nearly $5 billion last year.
According to LSEG data, 27 of the 32 analysts covering the stock recommend buying it, while four maintain neutral ratings and one recommends selling.
Market analysts also note that companies falling below their IPO price early in their public trading history have often underperformed peers over the long term, although many have still generated positive returns for investors.
