Early investors in SpaceX are anticipating a substantial financial windfall, potentially up to $1 trillion, as the 180-day post-initial public offering (IPO) lock-up period expires this week. This marks a significant event for those who invested in Elon Musk's rockets-to-artificial intelligence enterprise prior to its listing on the stock market.
Despite a recent downturn in SpaceX's share price since its record-breaking IPO, investors and insiders who acquired shares before the company went public will be able to sell their holdings starting Thursday. Although the shares, initially offered at $135, briefly traded above $200, they have since fallen to approximately $108, valuing the company at $1.5 trillion. This current price still represents a near fourfold increase for investors who bought into a private share sale just a year ago when SpaceX was valued at around $400 billion.
The acquisition of artificial intelligence startup xAI earlier this year significantly boosted SpaceX's valuation to $1 trillion and generated substantial returns for its investors. However, recent market trends, including a broader sell-off in AI stocks and a Starship rocket launch abort due to an engine issue, have contributed to the slump in SpaceX's stock price.
"SpaceX’s price since listing has been bumpier than a ride in one of its rockets re-entering the atmosphere," commented Russ Mould, investment director at broker AJ Bell. SpaceX has implemented a phased release for early investors to sell their shares, extending beyond the initial 180-day lock-up expiry to mitigate a sharp market impact, with some investors gaining selling access until early December.
Elon Musk, who holds a majority stake in SpaceX and previously became the world's first trillionaire, is restricted from selling his shares until June of next year. The upcoming expiry of the lock-up period has raised concerns about a potential flood of SpaceX shares onto the market, which could further depress the stock price.
A key indicator for the company's market performance will be its first earnings report since its Nasdaq debut on June 12. Analysts anticipate sales of nearly $7 billion for the last quarter, though the company's path to profitability remains distant due to substantial investments required for its AI data centers. In the previous quarter, SpaceX reported a loss of $4.3 billion on sales of $4.7 billion.
Analysts at Morgan Stanley note that the current share price suggests investors are valuing only SpaceX's Starlink satellite business, with its AI division receiving no apparent valuation. However, Adam Jonas, an analyst at Morgan Stanley, views the present market sentiment as an attractive entry point, predicting that SpaceX shares could reach $300, with half of that valuation attributed to its AI operations.