SpaceX shares climb 6.1% as lockup releases 912 million shares

Retail investors kept buying SpaceX through a 43% selloff, and their conviction carried the stock higher on the day a record lockup expired.

SpaceX shares rose 6.1% on Thursday as a lockup period ended, releasing up to 912 million shares worth more than $100 billion.

"There's a big question about how they're going to fund it," said Julie Zhu, an analyst at MoffettNathanson, pointing to the company's surging capital spending.

The gain contrasted with a down day on Wall Street, where the Dow Jones Industrial Average fell 0.9%, or 464 points, the S&P 500 ticked 0.2% lower and the Nasdaq composite slipped 0.1%. The 912 million shares that unlocked Thursday far exceed the previous supply of tradable stock, which stood at roughly 639 million shares since the June IPO. SpaceX has plunged 43% from its post-IPO high of $225.64, including a 14% drop Wednesday after its first earnings report.

The end of the lockup tests whether early investors still back the company for the long term. Additional restrictions lift through December, potentially making as much as 40% of the company tradable by year's end, while Elon Musk's roughly 6.4 billion shares stay restricted until mid-2027.

Retail Buying Meets a Wall of Shorts

Individual investors have yet to see a day of net selling since the listing, according to Vanda Research. During Wednesday's post-earnings plunge, retail traders snapped up almost $23 million worth of stock in the first hour after the opening bell. SpaceX is the fourth-most popular investment on Robinhood, trailing only Nvidia, Tesla and Apple.

Institutional investors have taken the other side. Speculators roughly doubled their collective short positions between the end of June and the company's first quarterly report, according to analytics firm S3 Partners. Those bets on the stock declining covered roughly one-third of all shares outstanding, worth about $24.6 billion.

The company's first earnings report since its record June IPO, which raised $85.7 billion and briefly gave SpaceX a $2 trillion valuation, showed revenue of $7.8 billion in the second quarter, up from $4.1 billion a year earlier and ahead of the $6.8 billion consensus. Starlink, which accounts for more than half of total revenue, posted a 66% increase in sales as subscribers doubled to 12 million, while revenue from the AI business jumped about 250%. The operating loss narrowed to $143 million from $970 million a year earlier.

Investor concern centered on capital spending, which surged more than sixfold to $18.4 billion in the quarter. First-half capital expenditures quadrupled from a year earlier. Chief Financial Officer Brett Johnson said the payback period on new AI-computing investments is less than one year.

Wall Street's big banks remain aligned with retail traders in their optimism. Deutsche Bank analysts described the company as a "haloscaler" that "represents in our view the apex of civilizational ambition," while Goldman Sachs and JPMorgan this week boosted their share-price targets despite the spending surge.

"SpaceX can outscale relative to AI hyperscalers because historically they can take a best-in-class engineer and make them work harder for less," said Colin Canfield, an analyst at Cantor Fitzgerald.

The coming weeks will reveal how the market values SpaceX when more of its owners are free to sell. A Morgan Stanley analyst has predicted the stock could realistically drop to $100, even while maintaining a bullish long-term outlook.

This article is for informational purposes only and does not constitute investment advice.