SpaceX shares continued their steep decline this week, extending one of the stock’s worst losing streaks since its public debut as investors reassess lofty artificial intelligence valuations, mounting capital expenditure concerns and the potential impact of an upcoming share lock-up expiration.
The stock fell more than 1% on Monday to close at $113.50, marking its 13th decline in the past 16 trading sessions. It slipped another 3% in early trading on Tuesday, leaving shares down roughly 50% from their June peak of $225.64.
The selloff has wiped out more than $1.2 trillion in market value, erasing nearly the equivalent of the current market capitalization of Elon Musk’s other publicly traded company, Tesla. The decline also reflects a broader retreat from AI-linked technology stocks, as investors become increasingly concerned that surging spending on artificial intelligence infrastructure could weigh on profitability before meaningful returns materialize.
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The recent weakness follows a wider rotation out of high-growth technology companies after several major firms, including Alphabet and Tesla, disclosed significantly higher capital expenditure plans tied to AI infrastructure. Investors have become focused on whether hundreds of billions of dollars being invested in data centers, chips and AI computing capacity will translate into sustainable earnings growth.
Despite the heavy selling pressure, options activity suggests many traders continue to bet on a rebound, although institutional investors appear more cautious.
More call options than put options changed hands on Monday, with traders purchasing about 106,000 call contracts compared with 77,000 puts. However, put options accounted for the majority of the $442 million in premiums traded, indicating that larger investors continued to spend more heavily on downside protection.
The day’s most actively traded option was the 330-strike call expiring Friday. Priced at just $0.10, the contract has only about a one-third of one percent probability of finishing in the money, according to ThinkOrSwim data. Such activity suggests many retail investors are pursuing highly speculative bets on a rapid recovery.
Meanwhile, some of the largest institutional options trades carried a more constructive tone. Data from Cboe LiveVol showed that four of the five biggest trades by premium were either neutral or bullish. Among them were sizable put-spread sales, including a multimillion-dollar transaction involving in-the-money put spreads that would benefit if SpaceX shares recover.
Another investor collected approximately $1.8 million by selling 5,200 put contracts with a $100 strike price expiring Oct. 16 while simultaneously purchasing 7,000 puts at the $85 strike, a strategy that generally reflects expectations that the stock will remain above key support levels.
“As an investor it’s early. As a trader, Wall Street is now punishing the AI stocks for capex,” said Charles Moon, a technology and momentum specialist at Prosper Trading Academy in Chicago.
Attention is now shifting to SpaceX’s first earnings report as a publicly traded company, which could prove to be another major catalyst for the stock.
Beyond the financial results themselves, investors are closely watching the expiration of the company’s post-IPO lock-up restrictions. Beginning on Aug. 6, eligible shareholders will be permitted to sell up to 20% of their locked-up holdings, representing as many as 911.5 million shares.
Large lock-up expirations often increase selling pressure as early investors, employees and insiders gain their first opportunity to monetize part of their holdings. While not all eligible shares are typically sold immediately, the prospect of additional supply entering the market frequently weighs on investor sentiment.
“I don’t think the lock-up on SpaceX will be as bad as everyone fears,” Moon said. “But it’s not going to help the cause either.”
The sharp decline has also triggered visible anxiety among retail investors, particularly across social media platforms where many individual traders had viewed SpaceX as one of the market’s premier long-term growth stories.
On Reddit’s WallStreetBets forum, one investor shared a screenshot showing losses of nearly CAD 455,000 on thousands of SpaceX shares, writing, “Elon has ruined me. He was supposed to take us to Mars and burn short sellers. Still holding 7,300 shares.”
Similar frustration appeared on Elon Musk’s social media platform X, where users responding to posts showcasing SpaceX’s Starship rocket lamented the stock’s collapse.
“It sure would be cool if this stops crashing… 30 percent short interest and down 40 percent on the month,” one user wrote. Another added: “I believed in you and lost over 20k in a month. I really hope that it comes back.”
The coming weeks could determine whether SpaceX stabilizes after its dramatic correction or faces another wave of volatility. Investors will not only scrutinize the company’s inaugural earnings as a listed company for signs that its valuation can be supported by financial performance, but will also monitor insider selling following the lock-up expiration and broader sentiment toward AI-related technology stocks.
For now, the stock remains emblematic of a wider shift in market sentiment. After months of rewarding companies tied to the AI boom, investors are now demanding evidence that unprecedented spending on artificial intelligence infrastructure can generate returns sufficient to justify premium valuations.