SpaceX (SPCX) shares extended their recent decline on Thursday, falling about 2% to around $132.
The fall today came as investors weighed the company’s premium valuation, a sharp increase in short selling, and the prospect of a significant increase in shares available for trading following its first quarterly earnings report.
The stock entered Thursday down for three consecutive trading sessions and seven of the previous nine.
Shares had already slipped below their $135 initial public offering price in premarket trading, falling to $134.94 after briefly touching an intraday low of $132.15 in the previous session.
The latest decline leaves the stock trading below the IPO price set during last month’s listing, erasing much of the enthusiasm that followed its public debut.
Valuation and lockups weigh on sentiment
Investor sentiment has weakened amid concerns over SpaceX’s valuation and the approaching expiration of share lockup restrictions.
Following the recent selloff, the stock still trades at approximately 48 times expected revenue, making it one of Wall Street’s most expensive stocks on that metric.
By comparison, Tesla recently traded at a revenue multiple of about 15.
The first major lockup expiration is expected shortly after SpaceX reports second-quarter earnings, which analysts anticipate will occur in early August.
Approximately 20% of the company’s outstanding shares are expected to become eligible for trading after the earnings release.
Short sellers rapidly increase bearish bets
At the same time, investors betting against the stock have sharply increased their positions.
According to S3 Partners, approximately 185 million SpaceX shares are now sold short, representing about 29% of the company’s publicly tradable float and roughly $25 billion in bearish positions.
That compares with an estimated 40 million shares, or roughly 5% to 7% of the public float, only three weeks earlier.
The increase in short interest comes after SpaceX shares fell about 20% during July and traded below their IPO price on Wednesday for the first time.
KeyBanc noted that SpaceX’s initial public float represented only about 5% of its roughly 13 billion shares outstanding, leaving most shares subject to lockup restrictions.
Following the first unlock, rank-and-file employees and certain early investors will be permitted to sell approximately 911.5 million shares on the second trading day after the company’s debut quarterly earnings report.
Those shares are currently valued at approximately $123 billion, exceeding the roughly $86 billion worth of shares currently available for public trading on the Nasdaq.
KeyBanc also said another 455.8 million shares could become eligible for sale if SpaceX’s stock trades above $175.50 for at least five of the 10 consecutive trading days through the date of the upcoming earnings report.
According to the firm, lockup expirations scheduled through December 8 would increase SpaceX’s potentially tradable float to about 40% of the company, with the remaining 60%, including Musk’s holdings, remaining locked until mid-2027.
Analysts remain positive as launch approaches
Despite the recent weakness, Wall Street remains broadly constructive on the company’s long-term prospects.
According to LSEG data, 27 of the 32 analysts covering SpaceX recommend buying the stock, while four maintain neutral ratings and one recommends selling.
Supportive analysts argue that the company deserves a premium valuation because of its Starlink satellite internet business, government launch operations, AI capabilities, and Musk’s track record of attracting investor support, despite SpaceX reporting a net loss of nearly $5 billion last year.
Investors are also watching the company’s 13th Starship test flight, scheduled for Thursday, which could serve as a near-term catalyst for the shares as the market evaluates SpaceX’s progress in its launch business alongside upcoming earnings and expanding public float.
The post Why SpaceX stock is down another 2% today appeared first on Invezz