SpaceX shares dropped 16.4% on Monday, erasing about $600 billion in market value and falling back to their debut price of $150. The decline marked a third straight day of losses, as attention shifted to a large wave of insider share unlocks expected between August and early September.
The selloff wiped out all gains from the stock’s brief post-listing surge, signaling a sharp reversal from the optimism that drove early trading.
Shares tumble as selling pressure builds
SpaceX shares dropped 16.4% on Monday, erasing about $600 billion in market value and falling back to their debut price of $150. The decline marked a third straight day of losses, as attention shifted to a large wave of insider share unlocks expected between August and early September.
The selloff wiped out all gains from the stock’s brief post-listing surge, signaling a sharp reversal from the optimism that drove early trading.
Early rally driven by retail demand fades
The stock had surged from $150 to $225 within days of listing, briefly pushing its valuation above Microsoft. That rally was largely fueled by retail traders, with Vanda data showing inflows of over $400 million in the first week, exceeding combined retail purchases of major tech stocks during the same period.
However, that demand declined quickly after June 16, the same day the stock peaked. As buying momentum faded, the share price reversed course and dropped more than 20% within a few sessions.
Limited float amplified volatility
Only about 5% of shares were available for public trading during the initial surge, intensifying price swings. Internal projections indicate that up to 44% of shares could enter the market by early September, potentially increasing the public float by roughly 900%.
The first tranche, representing around 20% of total shares, is expected to unlock following the company’s upcoming earnings report, likely introducing significant new supply.
Leverage and gamma dynamics added to swings
Retail traders also turned to leveraged products early in the rally, including roughly $65.8 million in a 2× long ETF tied to the stock. This activity contributed to a short-lived “gamma squeeze,” where options-driven trading accelerated upward momentum.
Once that momentum broke, the same dynamics amplified the downturn, leading to a rapid broadening of selling pressure.
Broader market risks and debt plans
The decline came as the company reportedly prepared to issue $20 billion in investment-grade bonds to refinance existing debt and support expansion plans, including in artificial intelligence.
Analysts say the episode highlights growing risks across large-cap technology stocks that have relied on retail-driven flows. With enthusiasm cooling and a significant increase in share supply ahead, volatility could remain elevated into late summer.
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