SpaceX Shares Sink Below IPO Price as Technical Woes and Lockup Jitters Overshadow Pentagon AI Deal
Published on 07/19/2026 at 12:02 | Redaktion boerse-global.de
A potential multibillion-dollar contract with the Pentagon to supply artificial-intelligence computing capacity, a rapidly expanding cloud business and a roster of bullish analyst price targets — none of it was enough to prevent SpaceX stock from plunging below its June flotation price for the first time. The defence contractor and space exploration company has shed more than $1 trillion in market capitalisation since its all-time high in mid-June, hit by a concatenation of technical setbacks, a rising short-seller army and the looming expiry of insider lock-up agreements.
The stock closed the week at €108.40 on European exchanges, a 5.39% single-day drop that left it only 0.99% above its 52-week trough of €107.34 touched on 17 July. In dollar terms the shares ended at $123.99, having breached the $135 IPO price two days earlier. The 30-day decline amounts to almost 35%, with relative-strength indicators reading 34.6 — a territory that typically signals oversold conditions yet has done little to stem the selling.
Pentagon negotiations and a growing cloud pipeline
Sandwiched between the red candles came news, first reported by the Wall Street Journal, of preliminary talks between SpaceX and the US Department of Defense. The discussions centre on the provision of computing capacity for military AI models in a deal that could be worth several billion dollars. While sources cautioned that the negotiations could still collapse, any agreement would extend an existing partnership that already covers rocket launches, satellite communications and missile-defence work.
The potential Pentagon contract dovetails with a broader strategy to scale up SpaceX’s cloud-infrastructure business. The company is positioning itself to undercut rivals such as CoreWeave on pricing, and existing arrangements with Anthropic, Google and Reflection AI already contribute an estimated $27bn to $28bn in annual revenue at full utilisation. Yet the market has focused instead on the near-term headwinds.
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Short sellers cash in as Musk fires back
The precipitous sell-off has made SpaceX the most favoured short target on Wall Street. According to Ortex, paper profits for short sellers reached $8.7bn by mid-July, while data provider S3 Partners put the figure closer to $5bn on a short position of roughly 192m shares representing 30% of the free float. That compares with a short interest of about 40m shares just three weeks ago. The nominal value of bearish bets stands at $25bn.
Elon Musk took to X on 18 July with an undisguised threat, stating that the probability of a large short position surviving over the long term is “very low.” He repeated the warning a day later. His personal fortune has suffered alongside the stock: Bloomberg’s billionaire index shows Musk’s net worth falling from a peak of $1.32tn to $792bn, a decline exacerbated by a concurrent 23% slide in Tesla shares from their yearly high.
Cathie Wood buys the dip; lock-up expiry looms
While bears celebrate, ARK Invest’s Cathie Wood has been accumulating shares. On 17 July the fund manager purchased 147,623 SpaceX units across four ETFs for $18.3m, with the flagship ARKK fund accounting for 95,129 shares worth $11.8m. Since the June IPO, ARK has poured more than $475m into the stock, including $52m in the prior week alone. ARK sold 26,002 Robinhood shares to help finance the buys.
A much larger overhang, however, is the approaching end of the insider lock-up period. Roughly 900m shares are scheduled to become free to trade shortly after SpaceX publishes its first quarterly report as a public company on 6 August, a wave that could intensify selling pressure. The anxiety is visible in the credit markets: yields on SpaceX bonds have drifted toward junk territory, signalling that debt investors are also repricing risk.
Analyst optimism meets market reality
The divergence between analyst expectations and share price is unusually wide. The median price target among 18 institutions stands at $225, with J.P. Morgan and Deutsche Bank independently arriving at that same figure. The average across all covering analysts is $235.34, implying upside of roughly 90% from current levels. Raymond James is the most optimistic, with a $800 target. Yet the stock is already trading below the IPO price that analysts had tacitly endorsed — a dissonance that has not gone unnoticed on trading desks.
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Starship abort adds to the narrative of fragility
Compounding the technical picture, the test flight of Starship Flight 13 was aborted on 17 July when the safety system halted the countdown at T-minus-zero after several Raptor engines failed to ignite. Musk confirmed that two engines needed to be replaced. The next attempt was initially slated for the following week and has now been set for 20 July 2026 at 22:45 UTC.
Investors are now looking to three potential catalysts: the outcome of the Pentagon negotiation, a successful Starship launch, and the 6 August earnings release. SpaceX reported a net loss of $4.9bn in 2025, with its xAI subsidiary alone posting an operating deficit of $6.4bn. At roughly 80 times trailing revenue, the valuation remains stretched even by growth-stock standards. Whether any of the forthcoming events can halt the slide — or whether the lock-up expiry and short-seller momentum will push the stock even closer to its 52-week floor — will define the narrative in the weeks ahead.
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