SpaceX Shares Hit New Lows as HSBC’s Hold Rating and Lock-Up Overhang Weigh on Sentiment

SpaceX shares hit post-IPO low of $110.85, down 44% from peak, as HSBC initiates with 'hold' rating and short interest surges to 32% of float.

SpaceX’s stock has been caught in a storm of conflicting signals this week, with the shares sliding to a fresh post-IPO trough of roughly $110.85 on Thursday before staging a partial recovery to close at €103.96 in European trading — a 2.89% gain on the day that did little to alter the broader downtrend. The 30-day decline of 23.67% underscores a market grappling with a rare dose of skepticism from HSBC, a looming lock-up expiry, and fresh operational delays for the Starship program.

HSBC’s decision to initiate coverage with a “hold” rating and a $115 price target landed like a bucket of cold water on a stock that had known little but bullish analyst commentary since its June debut. The bank, notably absent from the IPO syndicate, broke ranks with the consensus by arguing that much of SpaceX’s long-term potential — including Starlink expansion, rising launch cadence, and AI initiatives — is already priced in. HSBC’s methodology is unconventional: it discarded standard valuation frameworks for conglomerates, SPACs, miners, or biotech firms, instead using Tesla’s first-decade trajectory as a template for what it calls an “innovation premium” tied to Elon Musk’s ability to commercialize disruptive technology. Even with that generous overlay, the conclusion is cautious. Only in a “blue sky” scenario — where Starship becomes commercially viable by 2027, launch capacity doubles, Starlink captures a larger market with higher per-user revenue, and the AI unit commands richer multiples — does HSBC see material upside, pegging a possible $293 per share.

The bank’s restraint stands in sharp contrast to the broader analyst community. Among the 32 analysts covering SpaceX, 27 rate it a “buy,” and Goldman Sachs and Morgan Stanley launched coverage with top-tier ratings shortly after the IPO. Yet critics point to a valuation of roughly 40 times estimated 2026 revenue — far above industry norms — for a company that posted a net loss of around $5 billion last year.

The share price decline has been brutal by any measure. From the June 12 IPO price of $135, the stock rocketed to an all-time high of $225.64 on June 23, briefly handing SpaceX a market capitalization of $2.639 trillion. Since then, the sell-off has erased more than a trillion dollars in value, with the current market cap hovering near $1.479 trillion. That represents a 44% peak-to-trough decline and leaves the stock roughly 18% below its offering price. Elon Musk personally saw an estimated $35.2 billion wiped from his net worth on the worst single trading day.

Short sellers have seized the opportunity with both hands. The proportion of floated shares sold short has surged from 5-7% a month ago to 32% as of last week, representing roughly 206 million shares worth about $25 billion. In total, 360 million shares — 56% of the free float — are estimated to be out on loan, generating paper profits of approximately $15.5 billion for bears. Musk has publicly warned short sellers, stating that the survival probability of companies with significant short positions against SpaceX is “very low.” The bond market tells a similar story of strain: SpaceX’s 6.65% notes due 2056 have fallen from 97 cents to 87.6 cents on the dollar.

Technical indicators suggest the selling may be overdone. The relative strength index (RSI) has dipped to 33.3, deep in oversold territory, which can sometimes fuel short-term bounces like Thursday’s modest recovery. Retail investor sentiment in online forums has turned predominantly bearish since the HSBC rating, with elevated discussion volumes reflecting heightened anxiety.

The real test, however, is still to come. SpaceX will report its first quarterly earnings since going public on August 4, a critical moment for a company that has yet to provide detailed financial disclosures to public markets. Just two days later, on August 6, the first lock-up period expires, releasing up to 911.5 million existing shares onto the market. That would lift the free float from its current razor-thin 4.9% to roughly 12% of the 13.2 billion total shares outstanding. Additional tranches are scheduled for release in September, November, and December. A further 10% of shares are subject to a performance-based condition: they become tradable only if the stock closes above $175 on five of ten trading days around the earnings release — an outcome that looks highly improbable at current levels. Musk himself holds approximately 40% of the equity and over 80% of the voting rights, but his personal stake is subject to a separate one-year lock-up.

Operationally, the Starship program continues to generate uncertainty. The 13th test flight of the Starship system has been delayed twice: first on July 16 due to an ignition problem that required replacing two Raptor engines, and again on July 23 because weather conditions prevented ground-based imaging of the heat shield. The rescheduled attempt is now set for later this week. The flight’s primary objective is to document the heat shield under high dynamic pressure during ascent, with 20 simulated Starlink V3 satellites on board — six of them equipped with cameras.

Adding another layer of complexity, Tesla’s recent quarterly results have reignited speculation about a potential merger between the two Musk-controlled companies. When asked directly about a combination during Tesla’s earnings call, Musk replied that “you can’t discuss merging companies on an earnings call” and that it would require “the appropriate process.” Gene Munster of Deepwater has raised his probability estimate for a merger to 90%, up from 80%. Notably, Tesla reported GAAP net income of $1.114 billion for the second quarter, which included an unrealized gain of $1.005 million on the SpaceX stake Tesla acquired this year for roughly $2.002 billion — a holding of less than 1%. Without that contribution, operating profit would have been significantly lower. RBC highlighted in its analysis the growing importance of the SpaceX relationship to Tesla’s valuation.

HSBC’s $115 price target sits close to the current trading level, effectively telling investors that risk and reward are balanced — and that a compelling reason to buy is absent. Whether that calculus changes will depend on hard evidence: successful Starship flights, a credible path to commercial maturity, and clarity on how SpaceX plans to manage its capital needs following the pending Cursor acquisition. The August 4 earnings report should provide the first set of answers.