SpaceX stock fell 5% on Wednesday, marking its first decline since the company's public debut after a three-day rally that lifted shares 50% above their $135 IPO price. The pullback came one day after SPCX options began trading on Tuesday, giving investors their first practical tool to bet against the stock. The decline followed a rally in a market where selling opportunities were severely constrained - IPO investors faced lockup restrictions, virtually no stock was available to borrow for short selling, and put options were unavailable until Tuesday.
Options Trading Launch Opens Bearish Positions for SPCX
SPCX options began trading on Tuesday, opening the door for bearish bets for the first time. Trading activity was massive, with nearly 1 million call contracts exchanged on day one, placing SpaceX among the busiest options stocks on Wall Street.
Gary Black, managing director of The Future Fund, said on X that SpaceX's early trading resembled a "meme stock" more than a company being valued on fundamentals such as revenue, cash flow, or earnings potential. According to Black, the stock's rise came in a market where selling opportunities were severely constrained. Investors who received shares at the IPO price were subject to lockup restrictions, there was virtually no stock available to borrow for short selling, and put options were unavailable until Tuesday.
Analyst Addresses SPCX Lockup Release Conditions
Steve Grasso, CEO of Grasso Global, said on X that the conditions for an early lockup unlock are relatively demanding. According to Grasso, an additional 10% of eligible insider shares would only become available if SpaceX closes at or above $175.50, which is 30% above its IPO price, on at least five of the ten consecutive trading days leading up to second-quarter earnings.
Even if those conditions are met, Grasso noted that the move would not eliminate the August lockup schedule. Instead, it would increase the first unlock window from 20% to 30% of eligible insider holdings.
Grasso also highlighted the unusually small amount of SpaceX stock currently available for trading compared with other mega-cap companies. SpaceX floated only about 4%-5% of its shares in the IPO, leaving the vast majority of stock in insider hands. By comparison, nearly all shares of Apple, Microsoft and Nvidia are available for public trading.
SpaceX Appoints Roelof Botha as Independent Director
SpaceX expanded its board by adding Roelof Botha, a prominent venture capitalist and longtime partner at Sequoia Capital, as an independent director. His appointment increases SpaceX's board to nine members, alongside CEO Elon Musk, President Gwynne Shotwell and other directors.
The move deepens a longstanding connection between Musk and Botha. Both men are South African-born and worked together during PayPal's early years, where Botha eventually became CFO and helped steer the company's 2002 IPO before its sale to eBay. Sequoia became a SpaceX investor in 2020.
FAQ
What happened to SPCX stock on Wednesday?
SPCX stock fell 5% on Wednesday, marking its first decline since SpaceX's IPO after a three-day rally that lifted shares 50% above their $135 offering price.
When did options trading begin for SPCX?
SPCX options began trading on Tuesday, with nearly 1 million call contracts exchanged on the first day of trading.
What are the conditions for SpaceX's early lockup release?
According to Steve Grasso, CEO of Grasso Global, an additional 10% of eligible insider shares would become available if SpaceX closes at or above $175.50 (30% above its IPO price) on at least five of the ten consecutive trading days leading up to second-quarter earnings.
