SpaceX stock slips below IPO price: is it time to sell?

SpaceX SPCX stock fell below its initial public offering price on Wednesday, marking the lowest level since the company's market debut as enthusiasm surrounding one of the year's largest listings continued to fade.

The stock declined around 2% to $133.34, falling below its $135 IPO price set during last month's record $86 billion offering.

The move extended a volatile start to trading for Elon Musk's rocket, satellite, and artificial intelligence company.

After surging nearly 50% during its first three trading days, SpaceX shares have since surrendered much of those gains, losing nearly a quarter of their value over the following three sessions.

Lockup expirations may add pressure

Investors could face additional volatility in the coming weeks as the first share lockup expirations approach.

The initial lockups that have prevented early investors from selling their holdings are scheduled to expire after the company reports its first quarterly earnings as a public company.

If early shareholders choose to sell following the expiration, additional shares entering the market could create further downward pressure on the stock.

Some of SpaceX's early post-listing gains may also have reflected buying by passive investment funds tracking major equity indexes.

The company was added to the Nasdaq-100 in July after Nasdaq Inc. revised its eligibility rules to allow newly listed large-cap companies to join the benchmark after as few as 15 trading days, compared with the previous three-month waiting period.

SpaceX also joined the Russell 1000 Index in late June, just two weeks after its initial public offering, prompting additional purchases by index-tracking funds.

Analysts remain broadly optimistic

Despite the recent decline, Wall Street has maintained a largely positive outlook on the stock.

The expiration of the post-IPO quiet period for banks that participated in the offering led to a wave of analyst coverage, including Raymond James issuing the Street's highest published price target of $800 per share.

According to Bloomberg data, more than 80% of analysts covering the stock have assigned buy-equivalent ratings.

The average analyst price target stands at approximately $238 per share, implying roughly 78% upside from current trading levels.

UBS sees launch as potential catalyst

UBS said SpaceX's upcoming rocket launch could provide a near-term catalyst for the shares if the mission is successful.

Analyst Gavin Parsons wrote in a note on Wednesday, as cited by CNBC, that "SpaceX has made multiple hardware and software upgrades since the last flight."

He added, "This flight would demonstrate multiple new milestones and in our view be a positive for the stock."

UBS maintains a Buy rating on SpaceX with a $210 price target, implying approximately 54% upside from Tuesday's closing price.

SpaceX is scheduled to conduct its 13th rocket launch on Thursday.

According to Parsons, the mission supports UBS's forecast for four commercial launches this year and 1,588 flights in 2031.