Why SpaceX stock is falling another 2% on Friday

SpaceX SPCX shares slipped on Friday as investors looked ahead to the company's first earnings report as a public company and an upcoming insider share lock-up expiration.

The stock was down about 2.5% in early trading, changing hands near $109.

It has endured a volatile week, briefly falling to an all-time low of $107.01 before recovering.

For the week, the shares were down roughly 5% and have declined nearly 30% since their market debut at $150 last month.

Even so, the stock remains about 50% below its record high of $225.64.

Earnings and lock-up remain in focus

Investor attention is centered on SpaceX's second-quarter earnings report, scheduled for Aug. 4, which will provide the first detailed update on the company's performance since its public listing.

Another key event follows two days later, when the first lock-up expiration will allow eligible shareholders to sell up to 20% of their restricted holdings under the company's lock-up plan.

The prospect of a significant increase in tradable shares has weighed on sentiment in recent weeks, with investors concerned that additional supply could put further pressure on the stock.

Tesla merger report sparks fresh questions

The Wall Street Journal reported on Friday that Tesla executives have discussed options for separating the company's China business in the event of a future merger with SpaceX.

According to the report, advisers have considered alternatives including a spin-off, sale, or closure of Tesla's China operations, although the newspaper said the plans remain preliminary and could change.

The report said a merger between the two companies would likely face significant regulatory and geopolitical scrutiny because SpaceX is a major US defense contractor, while Tesla operates wholly owned manufacturing facilities in China.

The newspaper also reported that Chinese authorities could be concerned about a combined company gaining access to data from Tesla's customers in China.

Musk rejects report

Elon Musk denied the report, calling it "absurdly fake news" in a post on X.

"This has never even come up in a discussion ever," Musk wrote in response to the Journal's report.

Speculation about a combination of Tesla and SpaceX has intensified since SpaceX's initial public offering.

Last week, Musk declined to rule out a future merger, saying the two companies have become increasingly interconnected.

According to the Journal, Musk had previously instructed Tesla executives to maintain a clear separation between the company's US and China operations as a precaution against rising geopolitical tensions.

Tesla's Shanghai Gigafactory remains the automaker's largest manufacturing facility and a major export hub, with annual production capacity exceeding 950,000 vehicles.

The plant has historically accounted for more than half of Tesla's global vehicle deliveries.

With earnings approaching and the first major lock-up expiration days away, investors are expected to focus on management's outlook for growth, capital spending, and insider selling as the newly public company navigates its first major test in the public markets.