Why SpaceX stock is slipping another 3% on Wednesday

SpaceX stock SPCX continued to decline Wednesday as investors weighed a new milestone for Chinese rocket maker LandSpace alongside another large batch of shares set to become eligible for sale.

SpaceX shares were down at the time of writing after closing about 2% lower on Tuesday.

LandSpace successfully landed the first stage of its Zhuque-3 rocket, marking the first ground recovery of an orbital-class booster by a private Chinese company.

At the same time, roughly 319 million SpaceX shares held by early investors and employees are scheduled to become eligible for sale on Aug. 20.

The developments come as SpaceX stock remains above its $135 initial public offering price but below its post-IPO peak.

Shares closed their first trading day at $161.11, about 19% above the IPO price, before climbing to a post-IPO high of $225.64.

The stock subsequently gave back much of those gains ahead of its first quarterly earnings report before recovering as investors refocused on growth across SpaceX's core businesses.

The latest batch of shares adds to a substantial amount of SpaceX stock becoming available for trading following the company's June IPO.

SpaceX sold about 556 million new shares at $135 each, raising about $75 billion, excluding the underwriters' overallotment option.

That represented a small portion of the roughly 13.2 billion shares outstanding.

SpaceX has used a laddered approach to its post-IPO lockups, with shares becoming available at multiple intervals rather than through a single large unlock.

About 912 million shares became available for trading on August 6, while another 319 million are scheduled to unlock on August 20.

More than 700 million shares are expected to unlock in September, followed by more than 650 million in October.

By the end of the year, about 4.9 billion SpaceX shares will have become available to trade.

The expanding supply has been a major factor in the stock's early trading.

Investors have been cautious about buying ahead of potential profit-taking by early investors, contributing to SpaceX's decline to around $105, well below its IPO price.

LandSpace highlights growing rocket competition

LandSpace's successful Zhuque-3 landing also puts renewed attention on SpaceX's competitive position in reusable rockets.

Reusable rockets have been one of SpaceX's key advantages in the commercial launch market.

The 216-foot Zhuque-3 can carry about 14.2 metric tons to low Earth orbit, compared with about 22.8 metric tons for SpaceX's Falcon 9.

SpaceX also retains a significant experience advantage, having completed hundreds of booster landings since 2015.

LandSpace has now completed its first orbital-class booster recovery.

The milestone nevertheless shows that competitors are developing the ability to recover orbital-class rockets, potentially narrowing one of the technological advantages that has supported SpaceX's position in commercial launches.