SpaceX (SPCX) shares retreated sharply on Tuesday, giving back some of the gains from a three-day rally that had pushed the stock back above its initial public offering price. The stock fell about 5% to $131.94 in afternoon trading, though it remained roughly 18% higher over the previous five sessions.
The pullback comes as investors digest the recent rebound and turn their attention to the next major catalyst: a scheduled unlock of restricted shares on August 20. That event is expected to release approximately 320 million shares, or about 7% of the company's outstanding stock, from employee and pre-IPO holders.
Last week's first lock-up expiration passed without the heavy selling some had anticipated, which helped fuel the rally that took SpaceX back above its $135 IPO price. However, the upcoming unlock appears to be prompting some investors to reduce risk, while short-term traders may be locking in profits after the sharp move higher.
Despite Tuesday's decline, SpaceX shares remain well below their June 16 record close of $201.80. The stock had fallen more than 30% from that level ahead of the first lock-up expiration before rebounding.
Earnings beat supports longer-term outlook
The recent rebound was also supported by SpaceX's first earnings report as a public company. The company reported second-quarter revenue of $7.81 billion, exceeding the $6.93 billion analysts had expected. Chief Financial Officer Bret Johnsen said during the earnings call that SpaceX is on pace to reach $100 billion in annualized recurring revenue by the end of the year.
Deutsche Bank analysts said Monday that the target is "likely very achievable." They noted that SpaceX's second-quarter run rate was about $31 billion, but expect the company to reach its $100 billion goal primarily through contributions from its neocloud business and its acquisition of AI coding company Cursor. Citi analysts also raised their 2026 and 2027 forecasts after incorporating the sources of the earnings beat, reiterating a Buy rating with a $200 price target.
Morgan Stanley sees AI upside
Morgan Stanley sees significant potential for SpaceX's artificial intelligence business to increase the company's value. Analyst Adam Jonas wrote that as investors see more evidence of the Cursor and Grok story, the implied valuation discount on SpaceX's AI business could lift, driving potentially substantial stock appreciation. He added that few investors currently appear bullish on SpaceX's AI business beyond its neocloud operations, creating an upside-skewed catalyst path at current levels. Morgan Stanley maintained its Overweight rating and $300 price target.
SpaceX agreed to acquire Cursor for $60 billion in stock shortly after its June IPO, a move intended to strengthen its AI business following its merger with xAI earlier this year. Morgan Stanley noted that more than 60% of Fortune 500 companies and 50,000 enterprises use Cursor's coding tool.
For more context on the recent rally and the factors driving SpaceX's volatility, see our earlier coverage on whether the rebound is sustainable and the reclaiming of the IPO price. Additionally, the broader AI trade has been a key theme, as seen in the recent rally in AI-related stocks.
This article is for informational purposes only and does not constitute financial advice.
