Shares of Space Exploration Technologies Corp. (NASDAQ:SPCX) declined sharply on Tuesday, slipping below their initial public offering price as investors braced for a significant supply increase. The stock fell 4.5% to $132.57 in afternoon trading, after starting the session at $138.66. This marks a notable reversal from the three-day rally that preceded the drop.
Upcoming Lockup Expiration
The pressure stems from an upcoming lockup expiration on August 20, when approximately 320 million shares could become available for sale. This tranche represents 3.4 times SpaceX's average daily trading volume of 94.89 million shares, signaling a potential flood of supply that could weigh on the stock price. At Tuesday's price, the unlock has an implied market value of roughly $42.4 billion.
While not all eligible holders will necessarily sell, the sheer size of the tranche has unnerved investors, especially given the stock's recent volatility. The 52-week high stands at $225.64, but the stock is now trading 41.2% below that peak. The company's market capitalization is approximately $1.75 trillion, according to Google Finance data.
Strong Financial Results
Despite the near-term supply concerns, SpaceX's underlying business continues to show robust growth. Second-quarter revenue surged 92% year-over-year to $7.81 billion, up from $4.07 billion in the same period last year. The company narrowed its net loss to $541 million from $1.01 billion, a 46% improvement. EBITDA more than tripled to $2.78 billion, and operating losses shrank by 82% to $141 million.
Revenue beat Wall Street expectations by 14.6%, with a loss per share of nine cents, better than the 21-cent loss analysts had projected. The growth is driven by Starlink, which contributed $4.3 billion (55% of revenue), followed by AI operations at $2.56 billion (33%) and space operations at $962 million (12%).
Capital Expenditure Concerns
However, the company's heavy investment in AI infrastructure remains a concern. SpaceX spent approximately $18.4 billion during the quarter, with $16 billion directed toward AI facilities. This capital intensity is a key factor in valuation, as CEO Elon Musk has set a $100 billion year-end revenue run-rate goal, which would require a sharp acceleration from the current annualized pace of just over $30 billion.
Analyst Sentiment
Wall Street remains largely optimistic, with 24 buy ratings, six holds, and two sells. The consensus price target is $227.57, though estimates range from $75 to $800. Morgan Stanley's Adam Jonas sees the recent selloff as a buying opportunity, arguing that negative sentiment is disconnected from unchanged fundamentals. His $300 target attributes over 50% of valuation to AI.
Other analysts are more cautious. Piper Sandler's Alexander Potter has a hold rating with a $140 target, reflecting concerns about execution risks. The wide range of targets highlights the uncertainty surrounding SpaceX's long-term growth trajectory.
Near-Term Risks
The immediate risk is the August 20 unlock, which could lead to insider selling. Additionally, disappointing earnings from competitor AST SpaceMobile (NASDAQ:ASTS) may have contributed to Tuesday's decline, though the effect appears limited. The company's AI investments require sustained capital, and Starship development continues to face technical hurdles.
As the unlock date approaches, market participants will be watching closely for any signs of selling pressure. The sheer volume of shares available—equivalent to more than three days of typical trading—means that even modest selling could move the stock significantly. Investors are advised to monitor the situation carefully.
