SpaceX spent much of the past month below the $135 price from its initial public offering. The 15.83% gain rounds to a 16% jump, and it was the second straight day of gains.
The reason for this sharp turn was the end of the lockup period, the waiting period that stops company insiders from selling stock right after an IPO. That restriction lifted Thursday, and the number of shares eligible to trade more than doubled to 1.55 billion from 639 million at the time of the IPO.
Lockup expirations are watched closely because they can dramatically change the number of shares available to trade. SpaceX's float more than doubled, which made the market's buying response particularly notable.
Some analysts had predicted that extra supply would create selling pressure. Instead, investors bought heavily into the rocket, space, and AI business led by Elon Musk.
Get the free Always Be Buying eBook and learn the simple system for building wealth on any income
The extra supply is a choice, not a forced sale. Early investors can sell if they want to, but nothing forces them to, so the big test is not over just because the lockup has ended.
The rebound stands out because SpaceX had been going the other way. The stock lost more than $1 trillion in value from its peak after its record IPO, and on Wednesday it fell 14% after the company's first public earnings report showed AI spending above expectations.
The slide had been profitable for investors who bet against the stock, known as short sellers. S3 Partners data showed short interest of more than 250 million shares, or about 16% of the float after the 911.5 million-share unlock Thursday; the same short-interest level had been above 36% on Wednesday.
Before the rally began, those short positions had built up more than $9 billion in unrealized gains. Once prices started climbing, some of those positions likely got closed out, and Miller Tabak's Matt Maley said, "I'm sure there were some bearish bets that had to be unwound today."
On Friday, Argus Research lifted its recommendation for SpaceX to a Buy, after previously rating the shares Hold, and argued that the company should earn a fast return on its AI infrastructure investments. The rest of Wall Street is on a similar page.
Not everyone is ready to sign off on the price. "Once the dust settles from the trading around the end of the lockup period, investors are going to have to decide whether they're willing to pay such an expensive price for a company that will not show its full promise for many years," Maley said.
SpaceX's record IPO, the subsequent earnings-driven selloff, and the two-day rebound have left the stock far below its peak. The lockup expiration cleared away one overhang, but Argus's upgrade is based on the expectation that AI spending will generate returns quickly. Until that plays out, the debate over the stock's value is likely to continue.
If SpaceX is in your portfolio, you already know this is not a stock for people who hate whiplash. It lost more than $1 trillion in value, then handed more than $327 billion of it back in two days.
The lockup is over, but the question of what this company is worth is still wide open.
Download the free Always Be Buying eBook and start putting your money to work today