SpaceX has fallen below its IPO price of $135. Is it time for the bottom?

SpaceX's stock price is losing its luster in a rather brutal fashion.

After the U.S. stock market closed yesterday, its share price settled at $131. For a stock with an IPO price of $135 that was once hailed as a market darling on its debut, this figure marks the official breach of a symbolic psychological threshold.

Worse still, the decline continued in after-hours trading. As of writing, the after-hours price has fallen to around $126.

A month ago, SpaceX landed on the Nasdaq with a valuation of approximately $2.5 trillion, carrying the grand narrative of being "the starting point for human interstellar civilization." At that time, the $135 IPO price was fiercely contested, with prices briefly surging above $200. Now, it has retreated nearly 40% from its peak, and market sentiment has done a complete 180-degree turn.

With the $135 level breached, whispers of "buying the dip" are starting to emerge on social media. But is $135 really the bottom?

1. $135 is the Underwriters' Price, Not the Market's Value Floor

Many investors view the $135 IPO price as some kind of "official floor price," believing that a dip below this level means it's "cheap." This is a common psychological bias.

The IPO price is a figure negotiated between underwriters and the issuer. It reflects the supply-demand balance and fundraising needs in the primary market, not the secondary market's consensus on the company's intrinsic value. Underwriters like Goldman Sachs and Morgan Stanley consider factors such as market sentiment, order book interest, and fundraising scale when pricing, but they do not strictly adhere to the fair value derived from a DCF (Discounted Cash Flow) model.

If we calculate SpaceX's value using traditional valuation tools, the resulting numbers are sobering. Based on public information, SpaceX's revenue for 2025 is approximately $18.7 billion. Plugging this into a DCF valuation framework yields a fair value per share of roughly between $50 and $60.

In other words, the $135 IPO price itself already includes a significant "narrative premium" – for future Mars colonization, the monopolistic vision of Starlink, and faith in Musk's personal execution. How much are these narratives worth? Nobody knows. But one thing is certain: these are not numbers that DCF can calculate.

$135 is not the bottom. It is merely a starting point, one filled with emotional bubbles.

2. Headwinds from Both Market Sentiment and Fundamentals

Recently, SpaceX has faced a dense cluster of negative catalysts.

The first blow came from China's space industry. Not long ago, China successfully achieved a rocket recovery landing. This means the technology of "reusable rockets" is no longer a moat exclusive to SpaceX. As competitors begin to catch up and even approach the leading position in core technology, the "technological exclusivity" narrative underpinning SpaceX's ultra-high valuation inevitably shows cracks.

The second blow came from a launch failure. Just today, SpaceX's latest rocket launch mission was forced to abort during the final stage of the countdown due to some engines failing to start properly. Although the failure caused no casualties or equipment damage, it serves as a stark reminder to the market: space launches remain a high-risk industry, and any technical glitch can directly translate into delayed commercial orders and reputational damage. Following the news, selling pressure intensified in after-hours trading.

A challenged technological position combined with trust concerns arising from a launch failure – these two factors together are enough to make any rational investor reassess the risk-reward ratio of their holdings.

3. 5% Floating Supply + August Lockup Expiry: A Sword of Damocles

Beyond valuation and sentiment, SpaceX's share structure itself harbors significant risk.

Currently, SpaceX's free float accounts for only about 5% of the total shares. This figure is extremely low, meaning the number of tradable shares on the market is very limited. In the early days of listing, this low liquidity, amplified by sentiment and bullish forces, acted as a booster for the surge – a small amount of buying could push the price up. But now that the direction has reversed, the same low liquidity will amplify the speed of the decline – a small amount of selling can crash the price.

An even more severe test lies ahead: after the company's Q2 earnings report in early August, the first lock-up period is set to expire.

This means a large number of early private shareholders – whose holding costs are far below $135 – will be eligible to sell their shares on the open market for the first time. Think about it: if you were an investor who bought SpaceX shares at $50 or even lower during the private rounds, a current price around $130 represents a floating profit of over 160%. When the lockup window opens, what's your first impulse?

Of course, it's to cash out.

Buying SpaceX stock before the lockup expiry is like willingly standing in front of an impending supply shock, ready to catch the chips being thrown out by those eager to exit. This is less like investing and more like catching a falling knife.

4. What If You're Already Stuck? 

We've discussed many risks. But if the question is: I've already bought SpaceX stock, I'm underwater, and I don't want to cut my losses. Is there a way to balance the risk?

The answer is: yes. If you hold SpaceX stock but expect further downside in the short term – especially considering the supply shock from the August lockup expiry – you can use BIT's securities lending feature to short sell an equivalent number of SpaceX shares.

• If the stock falls, the short position profits, offsetting the book loss on the stock.
• If the stock rises, the short position incurs a loss, but the profit from the stock covers it.
• As of July 31st, BIT offers $0 fees for securities lending, making the cost of shorting extremely low.

This is a "market-neutral" hedging strategy: you are not betting on direction, only on volatility. Use securities lending to lock in downside risk during the high-uncertainty window before the lockup expiry.

Additionally, BIT is about to launch U.S. stock options functionality. At that time, you can purchase put options on SpaceX to buy "downside insurance" for your stock holdings.

• Pay a premium to buy put options with a strike price at $125 or lower.
• If SpaceX plummets to $110 or lower after the earnings report or lockup expiry, the put options appreciate significantly. The profit can cover or even exceed the loss on the stock.
• If SpaceX rebounds, you let the options expire worthless. Your maximum loss is only the premium paid – a manageable "insurance cost" compared to the stock's price fluctuation.

Compared to short selling, the advantage of options is that losses are strictly capped. As an option buyer, you won't face a margin call or liquidation; the maximum risk is clear at a glance.

5. Final Thoughts

SpaceX falling below $135 is not a signal to buy the dip; it's a reminder: **valuations driven by emotion and narratives will ultimately succumb to the gravitational pull of fundamentals.**

$135 might not be the bottom, and $126 might not be either. Given the structural backdrop of a 5% free float, the August lockup expiry, and a DCF fair value far below the current stock price, any rush to "buy the dip" carries extremely high risk.

For investors who already hold the stock, the rational choice is not to stubbornly hold on, but to use tools to manage risk. BIT broker's securities lending feature and its upcoming options functionality offer two different hedging paths – securities lending suits traders who want flexible exposure, while options suit conservative investors who want to cap their losses.

In the story of space travel, the most dangerous phase often occurs during re-entry into the atmosphere.

Risk Disclaimer: The market conditions, valuation estimates, and product descriptions mentioned in this article are for reference only and do not constitute investment advice. Trading in U.S. stocks and their derivatives involves risks related to market volatility, leverage, and liquidity. Short selling may expose you to unlimited losses. Options trading carries the risk of total loss of premium. Historical performance does not guarantee future results. Investors should make prudent decisions based on their own risk tolerance and consult professional investment advisors when necessary.