Why SpaceX Stock Is Back Down to Around Its $150 Opening Price, and What to Expect Next

When shares of Space Exploration Technologies (NASDAQ: SPCX) opened to the public at $150 per share on June 12, some interested investors had difficulty filling their orders. With massive demand for the stock in its first few days of trading, the price shot up to an intraday peak of $225.64 on June 16.

Since then, however, it's been a different story. By late June, it had given up most of those gains, and even briefly traded below $150. As of the close of trading July 1, SpaceX stock was changing hands for under $158 -- around 5% above where it opened to the public on June 12.

There appear to be two reasons for this decline, as well as two upcoming events that could drive meaningful short-term price movements for the stock.

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The stock price falls as demand fades

Highly anticipated initial public offerings (IPOs) can soar during their first few days of trading based on excitement alone. After all, investors have been hearing about these private companies for years, but were never able to buy shares. Many who buy in early do so because they don't want to miss out on what could be the next Amazon or Nvidia.

After a few days, however, those who particularly wanted to own the stock probably have already bought it. Active demand starts to decline. At that point, there isn't much left to help propel the stock price higher over the short term.

Then came the company's announcement of a $25 billion bond offering on June 22. That debt sale, coming so soon after the IPO, created fresh worries about the capital-intensive nature of SpaceX's ambitions. That day alone, shares dropped by more than 12% to close at $154.60.

What moves the SpaceX stock from here

Over the next two months, two events could create short-term price movements for SpaceX stock. On July 7, the company will be added to the Nasdaq-100 index, which includes the 100 largest non-financial companies listed on the Nasdaq. As a consequence, mutual funds and exchange-traded funds that track that index will have to buy SpaceX shares, which may prop up the stock price in the short term.

In August, SpaceX is expected to deliver its first earnings report as a publicly traded company. There may not be much new information in that readout, as SpaceX just went public, but based on recent trading, it's hard to imagine a muted response to whatever the company presents.

Perhaps more important is that the arrival of that earnings report will trigger the end of one of the company's lock-up periods, allowing insiders and early investors to start selling a fraction of their shares.

SpaceX created a staggered system for when insiders are allowed to sell shares. Starting on the second full day of trading after that first earnings report, insiders will be permitted to sell up to 20% of their eligible, previously locked-up shares. If the stock is trading 30% or more above the IPO price -- so, $175.50 -- those insiders can sell another 10% of their shares.

There's likely to be a lot of price action over the next two months, but that doesn't suggest the stock price will make meaningful moves higher or lower. It may remain stuck in a range for the short term, but that's not as important for long-term investing.

What will be more important is seeing continuous progress from SpaceX in building out artificial intelligence (AI) infrastructure, which will allow it to capitalize on what it predicts will be a $26.5 trillion total addressable market in AI.

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