SpaceX has recovered more than $750 billion in market value since August, but rising debt, upcoming share unlocks, and questions around its valuation are keeping investors on their toes.
SpaceX has had a turbulent start as a publicly traded company. After a blockbuster IPO in June, its stock surged past $200 before falling sharply, wiping out $1.2 trillion in market value by late July. Now, the company is making a strong comeback.
Shares have climbed 48% in three months, recently moving above $160 for the first time since early July. The recovery has added more than $750 billion in market value, giving investors a reason to reconsider the stock after months of volatility.
But the rally raises an important question: Is the market beginning to recognize SpaceX’s long-term potential, or is the stock getting ahead of itself?
There are reasons for optimism, but investors also have some significant risks to consider.
1. What Is Driving SpaceX’s Comeback?
Several developments have helped SpaceX regain momentum after its steep post-IPO decline.
One of the biggest recent developments was its acquisition of a crucial batch of wireless spectrum, which could help the company offer more comprehensive mobile phone coverage across the United States.
The company’s broader ambitions in space technology, satellite connectivity, and artificial intelligence have also helped shape investor expectations. Investors are looking beyond its existing operations and considering what SpaceX could become over the next several years.
Another important milestone came when its Starship rocket reached orbit for the first time in late September. This was a significant technical achievement that gave investors another reason to focus on the company’s long-term growth prospects.
The market is not just pricing SpaceX based on what it does today. It is also pricing in what investors believe it could achieve in the future.
That creates an opportunity, but it also makes the stock sensitive to changes in expectations. If the company delivers on its ambitions, investors could see further upside. If progress slows, the same expectations could become a source of pressure.
2. The Lockup Expiration: A Key Test for the Stock
One of the biggest concerns surrounding SpaceX has been the number of shares available for trading.
When SpaceX went public in June, only a small portion of its outstanding shares was available to investors. According to the source reports, the initial public offering made less than 5% of its total shares available to trade.
That limited supply helped create unusual trading conditions. Strong demand from investors, combined with the company’s entry into major stock indexes, supported the share price during its early days on the market.
However, the situation has been changing as restrictions on early investors expire.
SpaceX’s tradable share count has increased from roughly 7.5% of outstanding shares at the IPO to around 33%, according to Bloomberg’s report.
On October 9, another group of early investors became eligible to sell shares. The Motley Fool estimated that approximately 319 million shares, representing nearly $51 billion in market value, could become available.
It is important to distinguish between shares becoming eligible for sale and shares actually being sold. The unlock does not mean that investors will immediately sell their holdings.
Still, the possibility of additional shares entering the market matters.
If many early investors decide to cash out, the increase in supply could put pressure on the stock. On the other hand, if existing shareholders continue to hold their positions, the market may absorb the additional supply without a major decline.
So far, Bloomberg’s report suggests that the stock has remained relatively steady despite earlier lockup expirations, indicating that the anticipated wave of selling has not materialized as feared.
The next few weeks will provide another test of that resilience, particularly with further share unlocks expected around the company’s November earnings report.
3. Why Index Inclusion Matters
SpaceX’s recovery has also benefited from its position in major stock indexes.
When a company becomes part of a major index, funds that track that index generally need to buy shares to reflect its weight in the benchmark.
Bloomberg reported that SpaceX received a larger weighting in the Nasdaq-100 following its September rebalancing as more shares became available for trading.
This created an interesting dynamic.
As the number of tradable shares increased, SpaceX’s index weight also rose, potentially bringing additional buying from index-tracking funds.
In simple terms, the same development that could create selling pressure from early investors may also generate additional demand from index funds.
This helps explain why a rising number of available shares does not automatically lead to a falling stock price.
However, index-related demand should not be confused with a fundamental endorsement of the company’s valuation. Passive funds buy shares to reflect index weights, not necessarily because they believe a stock is attractively priced.
That distinction matters when assessing how sustainable the rally might be.
4. Is SpaceX Still Expensive?
SpaceX’s valuation remains one of the biggest questions for investors.
According to Bloomberg, the stock was trading at approximately 111 times expected earnings over the next 12 months, down from more than 540 times in July.
That is a substantial decline in its forward price-to-earnings multiple.
The reduction suggests that the stock has become less expensive relative to expected earnings than it was during the initial post-IPO surge.
However, a lower valuation multiple does not automatically make a stock cheap.
At around 111 times forward earnings, investors are still paying a substantial premium for future growth. For that valuation to be justified, SpaceX will need to demonstrate that its earnings can expand meaningfully over time.
Morgan Stanley analyst Adam Jonas has argued that developments in the coming months could help investors better understand SpaceX’s potential role in addressing constraints related to power and chip manufacturing, potentially supporting earnings growth and further valuation expansion.
That is an important part of the investment case, but it remains a forward-looking expectation rather than a guaranteed outcome.
For investors, the key question is not simply whether SpaceX’s valuation has fallen from its peak. It is whether future earnings growth can justify the price the market is asking them to pay today.
5. The Debt Question Investors Cannot Ignore
While SpaceX’s growth ambitions are attracting attention, its financing plans introduce another layer of risk.
The company is reportedly looking to raise $40 billion in debt to purchase chips from Nvidia as part of its broader AI ambitions.
That would be a substantial financing deal, particularly at a time when long-term US Treasury yields are near levels not seen in decades.
Higher borrowing costs can make large capital-intensive projects more expensive. They can also increase the financial pressure on companies that need significant upfront investment before their projects generate meaningful returns.
SpaceX’s reported financing plans have already become a concern for the market.
Bloomberg reported that the stock fell 6.6% over two sessions following the debt-related news, while the price of five-year credit default swaps on SpaceX debt reached a new high.
Credit default swaps provide a way for investors to hedge against, or speculate on, the risk of a borrower defaulting. A rise in their price can indicate that the market is demanding more protection against credit risk.
This does not mean SpaceX is heading toward a default. However, it shows that investors are paying closer attention to the financial risks associated with its expansion.
The opportunity is significant, but so is the amount of capital required to pursue it.
If SpaceX can turn its investments into strong, sustainable earnings, the debt could support its growth ambitions. If returns take longer than expected, financing costs could become a more serious concern.
6. What Should Investors Watch Next?
SpaceX’s near-term performance will likely depend on several developments rather than a single catalyst.
Here are three things worth watching.
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Upcoming share unlocks: More shares are becoming eligible for sale, including another major unlock expected around the November earnings report. Actual selling activity will be important in determining how much pressure this creates.
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The November earnings report: As SpaceX releases its second quarterly results as a public company, investors will have another opportunity to assess its financial performance and compare its progress with market expectations.
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Progress on its growth ambitions: Developments in satellite connectivity, Starship, and its AI-related plans could influence how investors assess the company’s long-term earnings potential.
The relationship between these factors will matter. Strong operating progress could help the stock absorb additional share supply. However, disappointing results or rising financing concerns could make the market less willing to support its current valuation.
The Bigger Picture
SpaceX’s rebound is a reminder of how quickly sentiment can change in a newly listed company.
After surging above $200 in its first few days of trading, the stock fell to $108 by late July. Since hitting its August low, it has recovered sharply, adding more than $750 billion in market value.
The recovery reflects renewed confidence in the company’s long-term potential, support from index-related buying, and developments across its business.
But the risks have not disappeared.
Upcoming share unlocks could increase selling pressure, the valuation still assumes substantial future growth, and the company’s reported $40 billion debt plan adds another financial consideration.
For long-term investors, the challenge is separating SpaceX’s business potential from the excitement surrounding its stock.
A strong recovery can signal improving confidence, but it does not guarantee that the stock is fairly valued.
The next phase of trading will show whether SpaceX can build on its recent momentum while navigating the financial and market pressures that come with being a newly listed company.