SpaceX’s stock faced a significant decline on Monday, marking three consecutive days of losses following a substantial surge after its initial public offering (IPO) earlier this month. In early trading, shares of the company dropped by 7%, adding to previous declines of 3.6% on Thursday and 5% on Wednesday. Despite these recent losses, SpaceX’s stock still sits approximately 27% above its initial offering price of $135, having opened trading at $150 on its debut day.
During its initial run, the stock reached a high of around $225, propelling SpaceX to a position as the fourth-most-valuable public company, surpassing industry giants such as Amazon and Microsoft. However, the stock’s current downward trajectory has raised concerns among investors.
In a significant development, SpaceX confirmed its first-ever bond issuance. Although the specific size of this bond offering wasn’t disclosed, the company stated that it intends to use the net proceeds to fully repay outstanding borrowings under its bridge loan facility, along with covering related fees and expenses. Reports suggest that the bond offering could be in the $20 billion range.
This bridge loan was initially secured earlier this year when SpaceX acquired Elon Musk’s xAI startup. The financing for this loan was provided by major financial institutions, including Bank of America, Citigroup, JPMorgan Chase, Goldman Sachs, and Morgan Stanley, which are also expected to manage the upcoming bond offering.
Debt offerings can sometimes exert downward pressure on stock prices, as investors become wary of increased interest expenses and the implications of a company’s reliance on additional funding. This potentially contributed to the recent slip in SpaceX’s shares.
Adding to the volatility, insiders are nearing the end of equity lock-up periods, which could further impact the stock price. According to 22V Research strategist Jeff Jacobson, there is a planned 20% insider share unlock following SpaceX’s earnings announcement set for early to mid-August. Additionally, if the stock trades 30% above its IPO price, there will be a 10% share unlock. Further share unlocks of 7% are scheduled for August 21 and again on September 10. This could allow insiders to sell up to 44% of SpaceX shares by early September, significantly increasing the float from approximately 4.2% post-IPO.
Investors and market watchers will be keenly observing these developments as SpaceX navigates this tumultuous period.
