SpaceX (SPCX) warns of $104 billion share release... Musk says "buy"

▲ SpaceX (SPCX), rocket, satellite internet, artificial intelligence (AI)/AI-generated image

On the day SpaceX (SPCX) shares fell to an all-time low, CEO Elon Musk supported the argument that it was a buying opportunity. However, concerns about massive selling pressure have grown ahead of the release of $104 billion worth of lock-up shares.

According to crypto media outlet BeInCrypto on August 3 (local time), Musk responded "I think so too" to an investor's X (formerly Twitter) post suggesting that the stock price drop would later be seen as a definite buying opportunity. SpaceX shares fell to an all-time low of $104.83 on the same day before closing at $114.53, up approximately 6% from the previous trading day.

SpaceX's stock price is 15% lower than its listing price of $135. Compared to its all-time high of $225.64, it's roughly half. Out of approximately 13.2 billion shares issued by SpaceX, less than 639 million shares are available for trading in the market, which is less than 5% of the total issued shares. The remaining shares are lock-up shares held by employees and early investors.

The first release of shares begins on August 6. Up to 911.5 million shares will become eligible for sale. Applying the closing price of August 3, this amounts to approximately $104 billion, 1.4 times the existing circulating shares. An additional 455.8 million shares are also subject to lock-up release, but can only be sold if the stock price exceeds $175.5. Musk's shares are locked up until June 2027, and he holds approximately 82% of the total voting rights.

Investors have engaged in trades targeting the large-scale share release. Shares betting on a decline in SpaceX's stock price surged from 111.3 million two weeks ago to 165 million, representing approximately 25% of the currently circulating shares. However, lock-up releases do not necessarily lead to a sharp drop in stock prices. In November 2012, Facebook's stock price rose by 12.6% on the day 773 million lock-up shares were released, as existing shareholders postponed selling, leading to a rush of buybacks from short sellers.

Morgan Stanley (MS) analyst Adam Jonas issued a "buy" rating and a target price of $300 for SpaceX last July. Most market target prices also exceeded $220. In contrast, CNBC host Jim Cramer argued that large-scale purchases should be postponed until the lock-up release is complete. ARK Invest CEO Cathie Wood commented that SpaceX could become the most important company in history. Starlink subscribers reached 10.3 million in March. SpaceX is valued at approximately $39 per dollar of estimated revenue this year, and investor attention is focused on the earnings announcement on August 4 and the lock-up release on August 6.

[Article Summary]

-SpaceX shares fell to an all-time low of $104.83 before rebounding approximately 6%.

-On August 6, up to 911.5 million shares, 1.4 times the existing circulating shares, will become eligible for sale.

-Musk agreed with the argument that the stock price drop is a buying opportunity, but his shares are locked up until June 2027.

*Disclaimer: This article is for investment reference only and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*