SpaceX Stock Drops Below $170: Here Is What History Says Investors Should Do

After gaining momentum from its all-time low of $104.83 per share, Space Exploration Technologies' (NASDAQ: SPCX) stock price crossed over $170 on Oct. 5. Since then, however, the share price has dropped, opening at $164.70 on Oct. 12.

That said, even though the company has only been public since June, SpaceX's own history, as well as broader investing history, suggest the next move investors should consider.

Image source: The Motley Fool.

What's happened since the public offering

SpaceX opened to the public on June 12 at $150 per share and closed the day at $160.95. Shares climbed all the way up to the $225 range on June 16, but after that, the stock price started dropping, which led to its all-time low of $104.83 on Aug. 3.

There are a few reasons this may have happened, including the initial public offering enthusiasm wearing off, as well as shareholders fearing that SpaceX insiders having the ability to sell their shares could send the stock price lower. There are also concerns about the company's spending and unprofitability, which may have been sinking in more for those who rushed into buying shares without fully understanding the risks and rewards of owning SpaceX stock.

That said, just as a mixture of factors sent the stock price lower, shares also rebounded on a mix of positive developments. One was that the initial fears about insider selling never materialized into massive and sustained stock price sell-offs. In addition, SpaceX is exploring expansion into wireless mobile services, which could unlock new revenue opportunities, and it recently demonstrated its space delivery capabilities by launching semiconductors into orbit for Alphabet.

That brief trading history suggests that, for those who plan to hold shares for the long haul, understand the risks, and have high conviction in the company, pullbacks offer a buying opportunity. But since SpaceX's time as a public company is limited, we can also look at a longer historical timeline from the broader markets.

The power of time

We saw how SpaceX has performed in its short time as a public company, but the broader markets, as represented by the S&P 500, have a deeper lesson to learn from.

According to research from The Motley Fool, stock prices tend to go up over the long haul: "Looking annually, the S&P 500 has delivered an 8% annualized return since 1950, a 9% annualized return since 1980, and a 6% annualized return since 2000 despite Septembers that are sometimes duds," the research states. "Over the long term, the S&P 500's returns have historically been an unmatched wealth-creation machine."

Those returns highlight that those who give an investment enough time and can handle periods of volatility can come out ahead with meaningful returns. For investors who label SpaceX as a high-conviction investment and who plan to hold for the long haul, staying invested while the stock price is falling, and ideally buying more shares, are two of the best moves to make.

Jack Delaney has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet. The Motley Fool has a disclosure policy.