SpaceX (SPCX) stock fell 2% overnight late Sunday and dropped 3% on Friday to $115.07 as investors focused on the company's first earnings report scheduled for Aug. 4 and a wave of post-IPO lockup expirations beginning Aug. 6. Morningstar warned that nearly 1 billion shares held by pre-IPO investors could become eligible for sale just two days after the earnings release, more than the 629 million shares sold in the company's June 12 IPO. The lockup expirations could significantly increase SpaceX's weight in major index funds including the Invesco QQQ Trust Series 1 ETF, where the company represented 0.98% of the portfolio as of July 22, though Morningstar cautioned that selling pressure from over 6.4 billion shares potentially becoming eligible over time may outweigh demand from index buying.
SpaceX Float Expansion Could Triple by September
SpaceX floated only about 5% of its shares at IPO, versus roughly 20% for a typical offering, according to Renaissance Capital strategist Matthew Kennedy. Morningstar estimates SpaceX's public float could triple by the end of September as lockups expire. If the share price stayed unchanged, its float-adjusted market cap could rise to about $675 billion in Nasdaq's calculations, placing it between Walmart and Intel.
The Invesco QQQ Trust Series 1 ETF held 39.7 million SpaceX shares worth $4.57 billion as of July 22, representing a 0.98% portfolio weight. Morningstar stated that every lockup expiration is an opportunity for SpaceX to claim a greater share of cap-weighted index funds, noting that unlike most stocks, SpaceX does not need a rally to gain index weight.
Morningstar Warns Lockup Supply May Outweigh Index Demand
Morningstar said another 455.8 million shares may unlock around Aug. 20, with further releases through the IPO's first anniversary. More than 6.4 billion shares could eventually become eligible for sale. The firm stated it believes most of the available shares will come to market, citing early investors' low cost basis and long holding periods. Morningstar called the setup a large technical overhang and warned that lockup supply could outweigh demand even from index funds.
SpaceX priced its IPO at $135, surged above $201, then fell as low as $110.85, leaving peak buyers down about 45%. Morningstar said the slump may already reflect anticipation of the dilution from the lockup. Koyfin estimates call for a quarterly revenue of $6.87 billion, earnings before interest, taxes, depreciation, and amortization (EBITDA) of $2.11 billion and an adjusted loss of $0.22 per share.
Morgan Stanley reiterated a $300 price target on Friday, stating that the selloff has outpaced any change in fundamentals. The firm said the current disconnect between increasingly bearish investor sentiment and largely unchanged fundamentals creates an attractive entry point in SpaceX shares.
SpaceX Shifts Falcon 9 Bookings Toward Starship Deployment
Bloomberg reported on Friday that SpaceX is turning away some Falcon 9 bookings beyond 2028 and has stopped taking future rideshare reservations as the company pivots toward Starship, its next-generation, fully reusable rocket that will eventually replace Falcon 9.
Starship successfully deployed its third-generation Starlink satellites on Friday, but the Super Heavy booster failed during its simulated landing. SpaceX said that a Starship carrying 60 next-generation Starlink satellites could deploy about 20 times the downlink capacity of a Falcon 9 mission.
FAQ
When does SpaceX report its first earnings as a publicly traded company?
SpaceX is scheduled to report its first earnings as a publicly traded company on Aug. 4.
How many SpaceX shares could become eligible for sale starting Aug. 6?
Nearly 1 billion shares held by pre-IPO investors could become eligible for sale starting Aug. 6, more than the 629 million shares sold in the company's June 12 IPO. Morningstar estimates that more than 6.4 billion shares could eventually become eligible for sale over time, with another 455.8 million shares potentially unlocking around Aug. 20.
What is SpaceX's current weight in the QQQ ETF?
As of July 22, the Invesco QQQ Trust Series 1 ETF held 39.7 million SpaceX shares worth $4.57 billion, representing a 0.98% portfolio weight.
