Will the upcoming insider lockup expiration turn the current SpaceX stock drop into an unstoppable downward spiral for the aerospace giant?
How Did the SpaceX Stock Move This Week?
Over the trading week, the stock experienced a severe downward trend, posting a weekly performance of -14.3% from Monday’s opening price of 144.70 to Friday’s close of 123.99. Throughout the week, the stock reached a weekly high of 144.92 and touched a weekly low of 122.12. The decline was marked by several notable outlier days. On Monday, the stock fell -4.2% as broader growth stock selling and lockup warnings from analysts set a bearish tone. The pressure intensified on Thursday, with shares dropping -3.1% ahead of the highly anticipated Starship launch. Following the last-second launch abort, Friday saw a further capitulation of -5.4%, cementing the weekly losses as short sellers aggressively expanded their positions.
Why Did the Starship Flight 13 Abort Hurt SpaceX?
The headline event of the week was the planned Thursday evening launch of Starship Flight 13, which was set to deploy 20 next-generation Starlink V3 satellites. However, the countdown was halted less than a second before liftoff due to a booster engine startup issue. CEO Elon Musk explained on X that four of the Super Heavy booster’s 33 Raptor engines failed to ignite, triggering an automatic launch abort. While ground crews safely offloaded propellant and Musk promised a rescheduled attempt for early next week after replacing two Raptor engines, the setback weighed heavily on investor sentiment. Analysts at JPMorgan, led by Seth Seifman, noted that proving rapid rocket reusability is the critical economic driver for the company’s long-term valuation, making launchpad bottlenecks a major concern.
Are Insider Lockup Expirations Triggering the SpaceX Stock Drop?
Beyond technical hurdles, a looming “August Cliff” is fueling the SpaceX Stock Drop. Market strategists like George Noble warned that the company’s ultra-tight initial public float of less than 5% is about to explode. According to the prospectus, a staggered lockup schedule will allow insiders to sell up to 20% of their shares starting in early August, potentially expanding the tradable float by roughly 900% by early September. This upcoming supply shock has attracted heavy bearish interest. Short interest has ballooned to approximately 185 million shares, representing a $25 billion bet against the company. Meanwhile, Piper Sandler initiated coverage on the stock with a Neutral rating and a $156 price target, highlighting these near-term supply risks. On the bullish side, Cathie Wood’s ARK Invest took advantage of the dip, purchasing over $36 million worth of shares this week.
What Should Investors Watch Next Week?
Next week, all eyes will be on the rescheduled Starship Flight 13 launch attempt, which Musk indicated could happen early in the week. A successful deployment of the massive Starlink V3 satellites would go a long way in restoring market confidence. Additionally, investors will closely monitor the upcoming Tesla earnings call on July 22, where questions regarding a potential merger or acquisition by SpaceX might arise, despite financial experts like Gary Black dismissing the idea as mathematically unfeasible. Meanwhile, legal developments surrounding Apple and other tech giants continue to influence broader sentiment in growth equities.
For more details on the recent market reaction, read about the SpaceX Stock Drop: Why the -5.3% Plunge Shocks the Market, which highlights how the dramatic drop pushed the aerospace giant well below its initial public offering price.
Space is the only way to scale at scale.— Elon Musk
The recent SpaceX Stock Drop serves as a stark reminder that even the most revolutionary companies must eventually face valuation and operational reality. While long-term bulls remain focused on the multi-trillion-dollar potential of orbital data centers and satellite broadband, near-term investors must navigate technical delays and upcoming share unlocks. For patient investors, this sharp correction below the $135 IPO price could ultimately present an attractive entry point once the market establishes a firm bottom.
