Retail investors were doing what they do best on Wednesday: Buying the dip in SpaceX shares aggressively, even as the company's stock sank after it released its first earnings report as a publicly traded firm.
Large institutional investors were apparently spooked on Tuesday evening after SpaceX $(SPCX)$ said it had booked second-quarter capital expenditures of more than $18 billion, nearly 40% higher than what analysts had modeled. Most of that money is going toward building data centers and other artificial-intelligence-related expenses.
But smaller individual players chose to focus on the positives. As a result, buying in SpaceX shares by the retail cohort looked particularly aggressive during the first hour of trading on Wednesday, according to Vanda Research data - even as the stock plunged.
On a net basis, individual investors bought $22 million of SpaceX shares during the first hour of trading - ranking third out of 37 opening sessions to date, and more than three times the average initial 60-minute net flow, the Vanda team said.
SpaceX shares had jumped on Tuesday before the company released earnings after the bell, FactSet data showed. Buying of bullish SpaceX call options had looked particularly aggressive, some analysts noted.
The shares fell to $108.27 at Wednesday’s close, down 13.6%. By comparison, the company's shares originally priced at $135 ahead of its June 12 initial public offering.
"Institutions initially focused on sharply higher AI capex and near-term profitability. Retail appear to have reached the opposite conclusion," the Vanda team wrote in commentary shared with MarketWatch. "Today's buying suggests investors continue to view aggressive AI investment as increasing the probability that [SpaceX] becomes the next long-term winner, rather than a reason to sell."
Time to buy?
Up to 911.5 million SpaceX shares, valued at more than $100 billion, will be eligible to be sold on Thursday for the first time, as the first batch of restricted equity held by early investors and company insiders is due to unlock.
The milestone will cause SpaceX's freely tradeable float to more than double, data showed. More shares will become eligible to trade in August and September, with additional releases set to continue through December in one of the largest post-IPO share unlocks in U.S. market history.
Brent Donnelly, founder of Spectra Markets, recalled how other stocks that drew sizable media attention around the expiration of their respective share lockups fared once the additional shares started hitting the market. The sample size he used was small - it included only three previous examples from the past few years - and in each case, the size of the unlock was much smaller than what is expected from SpaceX.
Yet it is worth noting that each time, the data showed that the first share unlock marked a buyable bottom - even if the pace of the recovery wasn't exactly V-shaped. In the chart below, Donnelly illustrated how each stock performed relative to the Invesco QQQ Trust Series I QQQ - an ETF that aims to track the Nasdaq-100 NDX - during the 50 days leading up to, and after, their first unlock.
"I suppose my starting point is that this information is surely priced in at this point and the imminent supply shock is more likely to be a red herring than a useful bearish indicator at this stage," Donnelly said in written commentary shared with MarketWatch.
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