Why SpaceX stock has rebounded after its lockup expiry, adding $500B in value

Wall Street entered August expecting one of the biggest tests yet for newly listed SpaceX.

The market had been bracing for Aug. 6, when the first post-IPO lockup expired, and hundreds of millions of shares held by early investors became eligible for sale.

Such events often trigger heavy selling pressure as insiders cash out, particularly after blockbuster listings.

Instead, the opposite happened.

SpaceX SPCX shares have rallied 35% in the five trading sessions since the lockup expired, adding roughly $500 billion (approx. ₦692.8 trillion) in market value and climbing back above their $135 initial public offering price, Bloomberg reported.

Rather than triggering a wave of selling, the expiration appears to have reassured investors that insider supply may not overwhelm demand as many had feared.

The sharp rebound has shifted sentiment around Elon Musk's space, satellite and artificial intelligence company after a turbulent first two months as a public company.

Lockup fears fail to materialise

SpaceX completed its record $86 billion (approx. ₦119.2 trillion) IPO on June 11, with shares initially soaring before reversing course over the following weeks.

By early August, the stock had shed more than $1 trillion (approx. ₦1,385.6 trillion) in market capitalization from its post-listing highs, leaving investors anxious that the first lockup expiration would create another round of heavy selling.

Instead, the stock staged one of its strongest rallies since listing.

"If the stock was $225, I would guess that it would have succumbed to the trend," Gene Munster, managing partner at Deepwater Asset Management, which owns SpaceX shares, told Bloomberg.

Munster said his firm had entered the lockup expiration in "brace mode" as investors waited to see how much selling would emerge.

Unlike most IPOs, where insiders are restricted from selling shares for about 180 days before a single lockup expiration, SpaceX adopted a staggered nine-stage release schedule to reduce potential market disruption.

The Aug. 6 event was by far the largest, releasing 911.5 million shares—more than were sold during the IPO itself.

The next release is scheduled for Aug. 20, when another 319 million shares, or roughly 7% of the shares subject to restrictions, become eligible for sale.

Similar-sized blocks will continue to unlock over the coming months before Elon Musk's 6.4 billion shares are released in June 2027.

Munster believes future lockup expirations could follow a similar pattern, with shares weakening beforehand before recovering afterward, provided insiders do not rush to sell.

Short sellers retreat as shares recover

Another factor behind the rally has been a sharp decline in bearish positioning.

According to CNBC, citing S3 Partners, short interest dropped to about 11% of publicly traded shares on Wednesday from a peak of 34% only a week earlier.

The decline coincided with the lockup expiration, which increased the freely tradable share count while prompting many investors betting against the stock to exit their positions.

Short covering can amplify gains because investors who borrowed shares to sell them short must eventually buy those shares back.

"Shorts that wanted to short are out of bullets," S3 Partners' Ihor Dusaniwsky said. "Only so much money you can put into a trade."

That buying pressure appears to have added momentum to a stock that had already begun recovering from its post-earnings decline.

Earnings concerns give way to optimism

The stock had fallen 14% immediately before the lockup expiration, though investors increasingly believe the decline had more to do with SpaceX's first quarterly earnings report than fears surrounding insider selling.

The company reported higher-than-expected capital expenditure as it ramps up investments in artificial intelligence infrastructure, a figure that initially unsettled investors.

However, the earnings report also included several positives.

Revenue comfortably exceeded analyst expectations, while the company's loss per share was smaller than forecast.

Those results, combined with fading lockup concerns, helped shift investor attention back toward SpaceX's long-term growth story.

During the earnings call, Musk reiterated ambitious financial targets.

He said he expects SpaceX to generate an annual revenue run rate exceeding $100 billion (approx. ₦138.6 trillion) by the end of this year before reaching $1 trillion (approx. ₦1,385.6 trillion) in annual revenue by 2029 or 2030.

Some investors also argue that SpaceX's shareholder base differs from that of most newly listed companies.

Rather than focusing exclusively on traditional valuation metrics, many early investors are viewed as long-term believers in Musk's broader vision for space exploration, satellite communications and artificial intelligence.

The fact that the stock entered the lockup expiration below its IPO price may also have reduced the incentive for early investors to sell immediately.

AI ambitions become the new catalyst

Investor enthusiasm received another boost this week after SpaceX unveiled Grok 4.6, its latest frontier AI model focused on long-running agents and visual reasoning.

The shares jumped more than 11% during Wednesday's trading session before finishing the day roughly 10% higher.

Following the launch, Musk wrote on X that Grok 4.7 would exceed "all current models."

He added that he would be "shocked" if competitors, including Anthropic, could outperform Grok 4.7 in real-world engineering tasks.

Investor optimism increased further after SpaceX released footage of an internal all-hands meeting.

During the meeting, Musk told employees that AI could soon become the company's largest business.

"Probably our AI revenue -- not probably, definitely -- our AI revenue will exceed all other SpaceX revenue probably in September, like next month."

He described AI as "an extremely important part of SpaceX's future" and outlined plans to build 10 gigawatts of AI computing capacity by the end of next year.

Musk estimated that such infrastructure could generate between $30 and $50 per watt annually, implying AI revenue of between $300 billion (approx. ₦415.7 trillion) and $500 billion (approx. ₦692.8 trillion) by 2028.

"Big numbers," he said.

The company also plans to train Grok using its entire internal knowledge base.

"So in a way, it'll be trained on you," Musk told employees.

Meanwhile, Starlink remains another major growth engine. According to SpaceX's IPO prospectus, the satellite internet service had approximately 10.3 million subscribers during 2026.

Musk has previously said Starlink could eventually carry more than 90% of global internet traffic.

Volatility expected as both bulls and bears dig in

Despite the recent rebound, analysts caution that SpaceX is unlikely to become a smooth ride for investors.

"I expect this stock to be volatile and go between fear of a story that is promising but is several years out in terms of cash flow, and greed when investors get excited about (Musk's) vision and the stunning promise," Rhys Williams, chief strategist at Wayve Capital Management, told Bloomberg.

"Bulls can dream the dream. And bears will focus on a stunning amount of capex."

Morgan Stanley analyst Adam Jonas remains among Wall Street's biggest supporters of the stock.

According to Investing.com, Jonas reaffirmed his Overweight rating and $300 price target, arguing that investors continue to undervalue SpaceX's AI business.

He believes the valuation gap could narrow as the company demonstrates how Grok and Cursor, its AI-powered coding platform, work together within a broader AI ecosystem.

Morgan Stanley also described Grok Bot as early evidence of an AI platform integrating real-time data, computing power, connectivity and intelligence.

At the same time, Morningstar Chief US Market Strategist Dave Sekera has said SpaceX's recent rally appears to be driven more by short-term supply-and-demand dynamics than by any meaningful change in the company's intrinsic value.

"You really need to divorce what's going on with the fundamentals of the company and the valuation of the company versus how it's going to trade in the marketplace," Sekera said on The Morning Filter podcast.

Sekera said the unlock could have a “huge impact” on short-term trading but is “not meaningful” to SpaceX’s long-term intrinsic value.

Morningstar has maintained its $62 fair-value estimate after SpaceX’s first earnings report as a public company, implying about 58% downside from current levels.

More tests lie ahead

While the latest rally has eased fears surrounding the first lockup expiration, investors are unlikely to enjoy a prolonged period of calm.

Several more lockup events remain on the calendar over the coming months, each with the potential to introduce fresh supply into the market.

At the same time, investors will continue evaluating whether Musk's enormous AI ambitions justify the company's rising capital expenditure and premium valuation.

For now, however, SpaceX has delivered an unexpected lesson.

Instead of marking the beginning of sustained selling pressure, its largest lockup expiration has become another catalyst in a rally increasingly driven by confidence in the company's AI future rather than concern over insider selling.