For the first time, retail investors sold more SpaceX shares than they bought. What does this mean?
Retail investors were allocated nearly one-third of the available shares during the IPO
Retail investors took advantage of the rise in SpaceX stock to lock in profits or cut their losses / Photo: X/SpaceX
On Friday, August 7, retail investors sold more shares of Elon Musk’s space company SpaceX than they bought for the first time, Reuters reported. For several weeks following the company’s IPO on June 11, retail traders had consistently bought more shares than they sold.
On Friday, according to Vanda Research, net sales totaled $4.5 million. By comparison, the highest volume of net purchases was recorded on June 16, at $144.6 million. This indicates that the volume of sales remains relatively moderate, according to Reuters.
In the case of SpaceX, it’s interesting that the trend reversal occurred on Friday, when the stock soared 14% and traded close to its IPO price, says eToro analyst Sam North. “It looks more like investors were using the strength [of the stock] to take some money off the table rather than a panic sell-off,” he added. The shift from sustained buying to selling is rarely linked to a single catalyst: it’s usually a combination of profit-taking, position fatigue, and investors reassessing their risk-reward ratio, says North.
Vanda’s senior equity strategist, Jai Malhi, estimated the average purchase price paid by retail investors since the IPO at $147. In his view, the selling on Friday, August 7, may have been an attempt to “cut losses at the right time.”
Just two days before the profit-taking, when the stock plummeted by 13.6%, retail investors, on the contrary, were actively buying shares on the dip. The volume of net purchases that day was the fourth-largest in the company’s trading history. The stock was falling at the time following SpaceX’s first quarterly earnings report as a public company. Investors were concerned about how long the profitable Starlink satellite internet business would be able to finance costly artificial intelligence projects.
SpaceX shares closed below their IPO price of $135 on every trading day from July 16 through August 7. On Monday, August 10, the stock rose 4.2% and closed at $138.74.
Retail investors play a major role in stock market dynamics: at least 30% of SpaceX’s shares were allocated to them as part of the IPO. Demand from this segment exceeded $100 billion, and the amount of funds raised reached approximately $15 billion.
This article was AI-translated and verified by a human editor
