SpaceX (SPCX) shares tumbled more than 5% on Tuesday, falling to around $107 as the market grapples with the impending expiration of post-IPO lock-up agreements and persistent concerns over the company's next-generation Starship program. The stock has now shed over $1.2 trillion in market value from its June peak of $225.64, with Tuesday's decline marking the 13th drop in the last 16 trading sessions.
The broader market showed mixed signals: the S&P 500 was little changed, while the Nasdaq Composite slipped 0.7%. The VanEck Semiconductor ETF fell 3%, dragged down by a 9% drop in Micron Technology.
Lock-Up Expirations Fuel Supply Fears
Investor attention is increasingly focused on the expiration of SpaceX's lock-up agreements, which begin shortly after the company's first quarterly earnings report as a public entity, expected on August 4. Two business days later, early investors will be eligible to sell nearly one billion shares—significantly more than the 629 million shares sold in the June 12 IPO. Over the coming year, more than 6.4 billion additional shares could become available for sale as restrictions expire.
Morningstar equity analyst Nicolas Owens suggested that the anticipation of increased share supply is already weighing on the stock. "It's conceivable that a good deal of the recent slump in SpaceX stock is precisely in anticipation of the dilution from the lockup," Owens said. He added that substantial selling is likely once restrictions begin to expire, as many early investors have held their positions for years and have low cost bases. "We believe that most of the available shares will come to market, because the existing sellers have low cost basis and long holding periods," Owens noted.
The first lock-up expiration on August 6 will be followed by another 455.8 million shares becoming eligible around August 20. Additional expirations are scheduled throughout September and continue into the first anniversary of the IPO. Notably, most of these releases do not include shares owned by CEO Elon Musk, certain senior executives, or board members. Musk's holdings are expected to become eligible for sale in June 2027, though he has previously stated he does not intend to sell.
For more context on the potential impact of these lock-ups, see our earlier analysis: SpaceX could drop to $100 post lock-up.
Starship Execution Remains Central to Valuation
KeyBanc Capital Markets reiterated its Sector Weight rating on SpaceX, emphasizing that continued progress on Starship is the most important driver of the company's long-term growth prospects. The firm described Starship Flight 13 as "near perfection" and said future flight tests will be critical to achieving full reusability and the rapid launch cadence needed to support SpaceX's long-term ambitions.
KeyBanc also noted that it is seeking additional details on SpaceX's decision to stop accepting Falcon 9 launch bookings after 2028, particularly as Starship has yet to demonstrate sustained, rapid launch operations. According to the firm, Starship underpins several key growth initiatives, including the expansion of the next-generation Starlink satellite network, orbital data centers, and future lunar and Mars missions.
Investor attention is increasingly shifting from technical progress to the pace at which those initiatives can be commercialized. KeyBanc said SpaceX's valuation is becoming increasingly dependent on the timing of future milestones and the company's ability to commercialize its next generation of space and communications technologies.
For a deeper dive into how Starship delays are affecting sentiment, read our report: SpaceX stock sinks 3% on Starship delay.
Short Interest and Market Sentiment
The stock's decline has been exacerbated by elevated short interest, which recently surged to 29% of the float. This has led some market participants to speculate about a potential short squeeze, though the looming lock-up expirations may temper any such dynamics. The combination of insider selling pressure and skepticism about Starship's commercialization timeline has created a challenging environment for the stock.
HSBC recently argued that the so-called "Musk premium" is already fully priced into SpaceX stock, leaving little room for upside unless the company delivers on its most ambitious goals. For more on that perspective, see: HSBC says Musk premium is fully priced in.
As SpaceX navigates this period of lock-up expirations and technical milestones, investors will be closely watching the company's first quarterly earnings report on August 4 for any updates on Starship progress and commercial timelines.
This article is for informational purposes only and does not constitute financial advice.
