The $327 billion rally lifts SpaceX shares 16% to $135 IPO price
SpaceX shares experienced an increase for the second consecutive day, nearing a return above the company’s initial public offering price of $135 for the first time since dipping below this significant threshold last month. Friday’s 16 percent surge contributed to a two-day rally of approximately 23 percent, resulting in an increase of over $327 billion in market value during that period. Investors eagerly acquired shares of the Elon Musk-led rocket, space, and artificial intelligence company, despite the lifting of restrictions that had previously prevented certain early insiders from selling on Thursday. Analysts had cautioned that the conclusion of the initial lockup might result in selling pressure on the stock.
The lockup expiration significantly increased the total number of shares available for trading, rising to 1.55 billion from the 639 million that were in circulation at the time Space Exploration Technologies Corp. went public. “Once the dust settles from the trading around the end of the lockup period, investors are going to have to decide whether they’re willing to pay such an expensive price for a company that will not show its full promise for many years,” said Matt Maley. The move represents a rapid turnaround for the stock, which had faced significant downward pressure, losing over $1 trillion in market value since its peak shortly after its record initial public offering.
Shares encountered further downward pressure earlier in the week following the company’s inaugural public earnings release, declining 14 percent on Wednesday after SpaceX disclosed expenditures on its artificial intelligence business that exceeded expectations. Over 250 million shares of SpaceX have been sold short, representing approximately 16 percent of the shares available for trading, as reported by S3 Partners LLC. That figure had exceeded 36 percent on Wednesday prior to the unlocking of 911.5 million shares for trading. “I’m sure there were some bearish bets that had to be unwound today,” Maley added. Prior to the two-day rally, short sellers had accumulated paper gains exceeding $9 billion by wagering on the stock’s decline.
Certainly, the expiration of the share lockup provides early investors with the opportunity to divest their holdings, those it does not impose an obligation to do so. Wall Street has sustained a predominantly optimistic perspective on the company. Argus Research upgraded its rating on the shares to buy from hold on Friday, citing encouragement from “rapid payback” on the firm’s AI infrastructure investments. All told, nearly 80 percent of analysts covering SpaceX have assigned a buy rating to the stock. Their average price target of approximately $221 suggests an upside potential exceeding 65 percent from the closing price of shares on Friday.
