SpaceX Shares Dip Below IPO Price Amid Lockup Expiry Concerns

SpaceX's stock recently slipped under its IPO price of $135 a share, marking a notable retreat after a strong debut. On Wednesday, shares hit a low of $132.15 before bouncing back to close just above the IPO threshold at $135.27. This marks a roughly 33% drop from the initial record close following the company's staggering $75 billion capital raise in June.

This selloff raises questions about what's next for the aerospace giant as it approaches a critical period: the expiration of stock lockup agreements. With the number of shares available for public trading expected to surge significantly in early August, the higher supply could lead to increased volatility in SpaceX's stock price on the Nasdaq.

SpaceX's IPO was historic for its size but tricky in structure. Less than 5% of shares were floated at launch, creating scarcity that drove up demand and pushed the company's valuation to around $2.1 trillion immediately post-IPO. However, these lockup restrictions on insider shares are set to expire soon, unlocking potentially huge volumes of stock onto the market.

Market watchers note that while involvement at current prices could be manageable from a trading standpoint, caution remains warranted given the looming lockup expiration. Jay Hatfield, CEO of Infrastructure Capital Advisors, pointed out that although active trading is likely, investors should remain mindful of the increased supply pressure expected.

Despite the recent slide, SpaceX remains one of the priciest stocks out there by revenue multiples. Its valuation sits around 49 times expected revenue, dwarfing competitors like Tesla, which trade closer to 15 times revenue. The premium reflects bets on SpaceX's flagship Starlink internet venture and government rocket launch contracts, along with Elon Musk's ability to keep investor confidence high despite last year's near $5 billion net loss.

Analysts remain largely bullish, with most maintaining buy ratings. Out of 32 analysts covering the stock, 27 recommend buying while only a handful rate it neutral or sell. Yet, historical data from similar large IPOs show an interesting trend: companies whose shares dip below IPO price early often underperform compared to those maintaining gains, though both groups tend to appreciate over time.

The first tranche of lockup expirations is scheduled shortly after SpaceX's upcoming quarterly earnings report, expected in early August. This release would free roughly 911 million shares, valued at about $123 billion, more than the total shares currently trading, potentially adding downward pressure on the price.

Additional shares-estimated at over 455 million-could become tradable if SpaceX's stock holds above $175.50 for a certain period following the report. By year-end, the share float could expand to cover 40% of the company, with the remainder, including Musk's stake, locked until mid-2027. All eyes will be on the company's performance and market reaction during this critical phase.