SpaceX (SPCX) shares declined about 2.5% in early trading Friday, hovering near $109, as investors positioned ahead of the company's first earnings report as a public entity and an upcoming insider lock-up expiration. The stock has had a turbulent week, briefly touching an all-time low of $107.01 before recovering, and remains roughly 30% below its initial public offering price of $150 from last month.
Earnings and lock-up in focus
The company is scheduled to release its second-quarter results on Aug. 4, which will offer the first detailed look at its financial performance since going public. Two days later, the initial lock-up period ends, allowing eligible shareholders to sell up to 20% of their restricted holdings under the company's phased lock-up plan. The prospect of a significant increase in tradable shares has weighed on sentiment, with investors concerned about additional supply pressuring the stock.
SpaceX's shares have fallen nearly 50% from their record high of $225.64, and the recent decline has been exacerbated by lock-up expiration concerns and questions about Starship. Analysts have warned of further downside, with Morgan Stanley suggesting the stock could drop to $100 post-lock-up, citing a lack of AI-related value.
Tesla merger report denied
The Wall Street Journal reported Friday that Tesla executives have discussed options for separating the company's China business in the event of a future merger with SpaceX. According to the report, advisers have considered a spin-off, sale, or closure of Tesla's China operations, though plans remain preliminary. The report noted that a merger would face significant regulatory and geopolitical scrutiny because SpaceX is a major US defense contractor, while Tesla operates wholly owned manufacturing facilities in China. Chinese authorities could also be concerned about data access from Tesla's customers in China.
Elon Musk denied the report, calling it "absurdly fake news" in a post on X. "This has never even come up in a discussion ever," he wrote. Speculation about a combination has intensified since SpaceX's IPO, with Musk last week declining to rule out a future merger, saying the companies have become increasingly interconnected. The Journal reported that Musk had previously instructed Tesla executives to maintain a clear separation between US and China operations as a precaution against geopolitical tensions.
Tesla's Shanghai Gigafactory remains its largest manufacturing facility and a major export hub, with annual capacity exceeding 950,000 vehicles, historically accounting for more than half of Tesla's global deliveries. The potential merger would create a $2.6 trillion conglomerate, but regulatory hurdles are substantial.
Market context and outlook
SpaceX's stock has been volatile since its debut, with short interest rising to 29% of float, prompting Musk to warn short sellers of a "low survival probability." The company's recent $1.6 billion Space Force contract failed to sustain gains, highlighting the market's focus on near-term catalysts.
With earnings and the lock-up expiration days away, investors will scrutinize management's outlook for growth, capital spending, and insider selling. The stock's performance in the coming weeks will likely hinge on these factors, as the newly public company navigates its first major test in the public markets.
This article is for informational purposes only and does not constitute financial advice.
