The ones who wanted to buy have already bought: SpaceX retail frenzy recedes, real selling pressure still in August

Original Author: Tyler Durden (ZeroHedge Anonymous Pen Name)

Original Translation: Source: ZeroHedge

Introduction: SpaceX has fallen for three consecutive days, plunging 16.4% on Monday alone, erasing $600 billion in market value and falling back to its opening price of $150. This analysis is straightforward, arguing that everyone who wanted to buy has already bought, and more critically, the sell pressure hasn't truly arrived yet. This pump-and-dump scheme used only 5% of the circulating shares, while insiders could potentially sell up to 44% of their shares by early September.

The start was a bang. SpaceX debuted on June 12 with an opening price of $150, far above its $135 IPO price. Within two days, aggressive traders began frantically buying $380 call options expiring two days later, aiming to send the stock sky-high and trigger a gamma squeeze.

@zerohedge tweeted: They're really going for it this time

Canaccord described the "new wave of optimism" accompanying SpaceX's listing in a report this morning:

"SPCX's order flow shows the market has entered a new level of frenzy. Before this historic IPO, we felt AI optimism was already full, sometimes excessive, but buying was mainly from rational (even if exuberant) institutions—large, well-capitalized public companies and PE investors. In our view, SPCX has opened a new chapter, with retail participation significantly increasing, pushing the stock into the top six globally by market cap, adding the equivalent of half a META in its first week. Its market cap already far exceeds that of sister company TSLA, while its revenue is only about 20% of the latter. Despite the name 'SpaceX,' revenue is actually tilted toward its connectivity business—Starlink contributed $11.39 billion, launch services only $4.1 billion, and AI computing $3.2 billion in 2025."

Vanda Track put it even more dramatically. In a review earlier Monday, it wrote: "SpaceX's first week of trading set records. Retail investors net bought $405 million of SPCX in the first five trading days, the strongest retail participation in an IPO in recent years. Buying was extremely fierce in the first few days, only cooling off later in the week. The capital flow increasingly looks like building long-term positions rather than chasing a short-term meme stock."

Caption: Retail capital flows for SPCX in its first five trading days

Source: Vanda Track

In context, the scale of retail buying of SPCX is even more astonishing. Last week, retail purchases of SPCX exceeded their total purchases of all other Mag 7 stocks combined—NVDA, MSFT, AMZN, META, GOOGL, and GOOG together only saw $278 million in five days. Retail buying of SPCX also surpassed the combined retail buying of the SPY and QQQ ETFs during the same period ($352 million). A stock that started trading just last week is already competing with the market's largest individual stocks and ETFs for retail capital.

Caption: SPCX retail buying vs. Mag 7 individual stock retail buying comparison

Source: Vanda Track

The old pattern repeated itself. Alongside the stock buying frenzy, retail investors quickly flocked to various SpaceX leveraged products, with demand equally strong. In the first few trading days, retail investors bought $65.8 million of the Leverage Shares 2x Long SPCX Daily ETF—a significant amount, but still far below typical levels seen in retail speculative frenzies. Even so, it crushed recent thematic new products: Roundhill's storage ETF (ticker DRAM) only attracted $5.6 million in its first four trading days, and it took DRAM 22 trading days for cumulative retail buying to exceed what the SpaceX leveraged ETF absorbed.

Caption: Retail capital flows for SPCX leveraged ETF vs. thematic ETFs in the same period

Source: Vanda Track

After the initial surge, momentum quickly fizzled, and the fantasy of "riding a reusable rocket all the way into orbit via gamma squeeze" dissipated. June 16 was the peak, with SPCX hitting a record high of $225, briefly pushing its market cap above Microsoft's. Since then, daily retail capital flows have collapsed, and retail turnover has nearly vanished.

Caption: SPCX daily retail capital flows—cliff-like decline after peaking on June 16

Source: Vanda Track

This brings us back to Canaccord's statement. Based on SpaceX's early performance, the investment bank judged that "tech stocks can probably sustain momentum in the short term," but it also warned: "There is now a more dangerous vacuum beneath these stocks."

Sure enough, as momentum faded and the market realized that trillions of shares were about to unlock, the stock fell for three consecutive days, culminating in Monday's crash. That day, as SpaceX tried to issue over $20 billion in investment-grade bonds for the first time—taking advantage of the still-exuberant bond market before the window closed, to refinance a much higher-rate bridge loan—SPCX plummeted 16.4%, erasing a record $600 billion in market cap in a single day. Combined with Wednesday's 5% drop and Thursday's 3.5% drop, the stock is now only slightly above its $150 opening price from two weeks ago.

Caption: SPCX price action since listing—falling from a high of $225 back to near $150

Source: ZeroHedge

Worse still, in after-hours trading, SPCX briefly touched the $150 IPO opening price. If it breaks below this level at tomorrow's open, everyone who bought and held in the secondary market will be underwater.

Caption: SPCX falls to near the $150 IPO opening price in after-hours trading

Source: ZeroHedge

It's particularly noteworthy that this pump-and-dump occurred with only 5% of the float tradable—95% of shares remain locked up. But that will change soon.

Caption: SPCX unlock structure—currently only 5% in circulation, 95% locked

Source: ZeroHedge

Jeff Jacobson, strategist at 22V Research, said that after SpaceX reports earnings in early to mid-August, 20% of insider shares will unlock. Additionally, if the stock price is 30% above the IPO price, it triggers a 10% unlock; there are also 7% unlocks around August 21st and September 10th.

Caption: SPCX lock-up expiration schedule

Source: 22V Research

Jacobson said insiders could potentially sell up to 44% of their SpaceX shares by early September, expanding the current float by approximately 900%.

In other words, pushing the stock price higher will only get harder from here. Meanwhile, Michael O'Rourke, chief market strategist at JonesTrading, said "the sellers have regained control," adding: "Everyone in the world who wanted to buy has already bought."

Bloomberg, commenting on today's downturn, wrote that SpaceX's decline "dragged most of the market down with it."

Whether that's entirely true remains to be seen. But in this market—which has relied almost entirely on retail frenzy and momentum chasing since the March lows—once retail investors truly get scared, first SpaceX, then the storage bubble, and finally the semiconductor stocks that have enjoyed the full benefit of the AI trade...

@zerohedge tweeted: The divergence between hyperscale cloud vendors and semiconductors is unsustainable: massive capital expenditure is the key variable.

...Then, it will be time to reverse T.S. Eliot's line: This is how the sell-off ends, not with a whimper, but with a bang.