SpaceX’s Stunning Reversal: $400 Billion Wiped Out as IPO Euphoria Fades
SpaceX shares struggled to regain momentum on Tuesday after briefly slipping below their initial offering price, a symbolic setback for a stock that only days ago was among Wall Street’s hottest stories.
The stock fell as much as 3% in early trading, dropping to roughly $149 after making its public debut on June 12 at $150 per share. While the shares later recovered and climbed about 6% during the session, most of those gains evaporated by the closing bell, with the stock ending the day up less than 1%.
The decline below the offering price was viewed as an important psychological marker, suggesting that SpaceX may be following the same path as several high-profile public offerings that initially surged before retreating beneath their debut levels.
Traders and major shareholders, including large institutional investors, are expected to face increasing pressure to support the stock after its recent slide. Investors are also watching another key threshold: the company’s IPO price of $135 per share.
Even at approximately $150, SpaceX remains only about 11% above its IPO price. From its recent highs, the company has shed roughly $400 billion in market value and is now at risk of falling below the $2 trillion market capitalization mark.
The pullback marks a dramatic shift from last week, when SpaceX soared to a record high of around $225 per share and surpassed both Amazon and Microsoft to become the fourth-largest publicly traded company in the world.
The weakness in SpaceX shares has also spread across the broader space sector, dragging down many companies that had rallied alongside the highly anticipated market debut.
According to Bespoke Investment Group, a basket of space-related stocks had gained an average of 99% for the year as of the close of trading on June 11, the day before SpaceX priced its shares at $135. Since then, those same stocks have declined by an average of 17%.
Another factor weighing on investor sentiment is the approaching expiration of several lock-up restrictions. At the time of its public offering, SpaceX made available just 4.2% of its total float.
Jeff Jacobson, a strategist at 22V Research, told Yahoo Finance that a 20% insider share unlock is scheduled to take place following the company’s earnings report, which is expected in early to mid-August.
Additional unlock events are also on the horizon. A further 10% of shares could become eligible for sale if the stock rises 30% above its IPO price, while separate 7% share unlocks are expected around Aug. 21 and again on Sept. 10, potentially adding more selling pressure in the weeks ahead.
{Matzav.com}
