3 Reasons SpaceX Stock Could Crash in Q4 -- and 1 Reason It Won't

Space Exploration Technologies (NASDAQ: SPCX) had a strong positive impact on space stocks when it debuted through an initial public offering (IPO) on June 12. SpaceX shares were priced at $135 per share for the IPO, but the stock opened that day to the public at $150. It reached an intraday high of $176.52 before closing at $160.95.

Overall, though, the stock is down more than 7% this year, unless you were fortunate enough to buy it at its IPO price. Here are three reasons why the stock could crash in the fourth quarter and one reason why it won't.

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The lockup period ends in the fourth quarter

SpaceX's IPO was structured with a staggered insider unlock schedule tied to time-based milestones, rather than the single lockup expiry used by many new stocks. That structure replaces the 180-day cliff with a series of dated releases, which keeps supply questions in front of investors for months rather than compressing them into a single expiration day. However, the 180-day lockup period will expire for all insider investors, except for CEO Elon Musk and a few select shareholders, in early December.

A deluge of people unloading their SpaceX shares could easily drive down the price and set off a selling frenzy. We already saw a little bit of that on Sept. 9, when some investors were able to sell in the 90-calendar-day unlock milestone. Though that period represented only 7% of the stock's shares, the price dropped from a midday high of $153 to close at $147.55.

Poor third-quarter earnings could spur investors to sell

SpaceX is expected to report third-quarter earnings in early November. In the second-quarter earnings release, the company reported revenue of $7.8 billion, up 92% year over year. However, it also had a net loss of $541 million and spent $28.5 billion on capital expenditures over the first six months, up 309% from the same period last year. The market didn't react well to those earnings. The stock, after closing at $125.33 on Aug. 4, just before the earnings announcement, opened at $108.27 on Aug. 5. It's easy to see how another less-than-spectacular third quarter could further drop the stock.

Despite strong top-line revenue from Starlink and launch services, SpaceX's aggressive expansion, particularly its massive infrastructure investments in Starship development and artificial intelligence (AI)/SpaceXAI compute clusters, has led to massive cash burn. The company posted a negative free cash flow of $13.8 billion for 2025 and continued significant burn through early 2026 as capital expenditures surged.

If credit conditions tighten or fourth-quarter capex spending estimates jump higher, Wall Street could reprice the stock downward to reflect its heavily delayed path to positive free cash flow.

SpaceX's valuation may come back down to earth

Because of Musk's popularity, the stock is trading at a high multiple. Since it isn't generating a profit yet, the best valuation indicator to use is its trailing price-to-sales ratio, which is 94.8. That's a massive premium to conventional defense, aerospace, and tech peers and leaves SpaceX little room for error. Any technical setback, delay in commercial Starship operations, slowdown in Starlink subscriber growth, or sudden volatility in high-priced cloud compute contracts, such as AI cluster hosting deals, could trigger a rapid valuation compression in the fourth quarter.

However, SpaceX has a huge integrated moat

For long-term investors, buying SpaceX is less a bet on aerospace launch and more an allocation to a vertically integrated global utility and compute infrastructure platform. The company has a near monopoly in several categories. Its Falcon 9 medium-lift rocket has a huge share of the global commercial market, with 684 missions. Its Dragon ship is the only operational U.S. spacecraft to ferry crews to and from the International Space Station. Its Starlink service is a global internet network with 6,750 satellites in orbit, serving more than 10 million customers across 160 markets.

Its Starship program, though still experimental, is scheduled for its 14th test flight, and represents the next step in launch scale and hardware use for the next decade.

SpaceX controls both rockets and satellites, and it is positioned to capture entirely new markets in defense and direct-to-cell connectivity, as well as to put data centers into space before peers can get off the ground.

Many investors place their faith in Musk

Investors view Musk through his ability to build category-defining, megacap companies, most notably Tesla, from early-stage concepts. Because Musk has repeatedly proven that he can scale complex engineering businesses past traditional industry limitations, institutional investors routinely apply a premium to his ventures compared to peers.

The market is judging the stock based on what it could do years from now, and while that's risky, it has paid off for early Tesla investors. They are betting that SpaceX's near-monopolies in rocket reusability and low Earth orbit will remain intact, and the company's first-mover advantage will continue to deliver record revenue.

James Halley has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.