SpaceX Earnings Loom Large Over Share Lockup Expiration
· news
SpaceX on Thin Ice: Shorts and Earnings Loom Large
SpaceX’s first quarterly earnings report as a public company is set to be released soon, but the company faces significant challenges beyond its financials. The impending share lockup expiration is a major concern for investors, with SPCX shares trading at around $109 – down nearly 50% from their year-to-date high and about 19% from the IPO price of $135.
The market’s bearish sentiment towards SpaceX is reflected in the staggering amount of short interest. At 219.3 million shares, this represents a significant portion of the tradable float – a whopping 34%. This bearish position is valued at roughly $24.6 billion, eclipsing even Tesla’s short interest. The scale of these bets against SPCX has driven up the cost of borrowing shares, but analysts expect this to ease after next week’s events.
The lockup expiration on August 6th poses a significant near-term risk for investors holding SpaceX stock. With approximately 911.5 million shares becoming eligible for sale, the float is set to more than double from its current level of around 640 million shares. This surge in freely tradable shares could take the proportion of total shares outstanding from about 5% to as much as 12%, unleashing potentially close to $100 billion worth of stock into the market.
The first lockup expiration marks only the beginning of a series of eight planned tranches extending through January 2027. As these restrictions gradually lift, investors will be watching closely for signs that SpaceX can mitigate the expected influx of shares without triggering a collapse in its stock price.
Consensus estimates for SpaceX’s current quarter are encouraging but far from reassuring. Revenue is projected at $6.75 billion, with adjusted EBITDA standing at about $2 billion and an adjusted loss of roughly $0.26 per share. Consumer Starlink subscribers are estimated to be 12 million, generating average monthly revenue per user near $65.50.
Analysts’ sum-of-the-parts analysis has valued SpaceX at a range of prices from $8 to $152 per share, but Morgan Stanley’s “Overweight” rating on SPCX stock carries a price target of $300. Despite this optimism, the upcoming earnings report is being framed as SpaceX’s “Max Q” moment – its time of maximum stress.
Investors would do well to remember that short interest has increased dramatically in recent times. As shares become more freely tradable, market dynamics could shift rapidly. The coming weeks will be a test not just for SpaceX’s financials but also for the resilience of its stock price.
With short positions valued at over $24 billion and mark-to-market gains standing at some $7.3 billion since SPCX started trading, investors are bracing themselves for a potentially bumpy ride ahead.
Reader Views
- RJReporter J. Avery · staff reporter
The impending share lockup expiration for SpaceX is a ticking time bomb that investors can't ignore. While analysts expect revenue and EBITDA estimates to meet expectations, the sheer scale of short interest suggests that many are betting against Elon Musk's space venture. The real concern isn't just the number of shares being released into the market, but also the psychological impact on investors. A collapse in stock price could trigger a wave of margin calls and forced sales, exacerbating the bearish sentiment. Investors would do well to prepare for the worst-case scenario, even if consensus estimates suggest otherwise.
- CMColumnist M. Reid · opinion columnist
The impending lockup expiration is indeed a critical juncture for SpaceX investors, but let's not get caught up in the hype surrounding short interest and earnings projections. What's been largely overlooked is the significant dilution effect that this influx of shares will have on existing investors' ownership stakes. As SpaceX's stock price struggles to stabilize, institutional shareholders may find themselves shouldering a disproportionate burden of capital losses due to the sheer magnitude of new shares entering the market. This could be a crucial factor in determining the long-term viability of the company's valuation.
- ADAnalyst D. Park · policy analyst
The impending lockup expiration is just one aspect of the precarious situation SpaceX finds itself in. What's often overlooked is the impact on short sellers. With the surge in tradable shares, many will be forced to cover their bets, which could lead to a wave of selling pressure that exacerbates market volatility. This dynamic highlights the need for careful timing and coordination among investors with bearish views, lest they find themselves caught in a liquidity squeeze.