SpaceX Stock Has Multiple Tailwinds Before Lockups Begin to Expire
Mondeum Capital (UK) Limited
SpaceX shares have climbed during their first three days of trading, and the current trends suggest this momentum could last for weeks. On Tuesday, the stock rose 4.8% and closed above $200 for the first time. It gained another 3.3% in premarket trading on Wednesday, reaching $208.58. That puts the price about 50% higher than its $135 IPO price and values the company at over $2.6 trillion. Here’s what is fueling this rally and when more shares are expected to become available.
The launch of SpaceX options on Tuesday added to the excitement. Adjusted for the roughly 640 million shares available to trade, SpaceX options were traded four times more than Tesla’s and 25 times more than Nvidia’s on a similar basis. Most of the activity was in call options, especially the $220 call expiring in June. When many investors buy calls, sellers need to buy shares to protect themselves as prices go up. This extra demand can push prices even higher and keep the momentum going, even without new company news.
Another reason for the buying is that exchange-traded funds want to include SpaceX in their portfolios. For example, Direxion has started a 2x leveraged SpaceX Bull ETF, which aims to give investors twice the daily return of SpaceX shares. Both options traders and ETF managers are competing for a limited number of shares.
Instead of a typical 180-day lockup, SpaceX is using a staggered schedule to release shares. After the first quarterly earnings report, 20% of locked shares will become available, or 30% if the stock stays above $175. Additional 7% portions will be released at 70, 90, 105, and 135 days after the IPO, which extends the schedule into mid-October. Another 28% will be unlocked after the second quarterly report, and the rest will be available after 180 days.
None of these lockup expirations will happen before SpaceX is added to the Nasdaq-100 later this month. Adjusting for the available shares, joining the index could bring in $7 billion to $10 billion in passive buying. The first big increase in available shares will come with the first earnings report. Until then, the technical factors supporting the stock are still strong.
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