SpaceX had its best day ever, despite the lockup expiration and earnings. Why? As more shares are freed for early investors to sell, the stock’s float grows, which increases SpaceX’s weighting in the NASDAQ 100. Every mutual fund and ETF tracking that index had to buy more shares, which at least matched, if not overwhelmed, the selling from early investors.
Short sellers are another factor. The drop from the $200s to 105 was largely driven by short sellers betting the stock would keep falling. When it runs up, they panic and cover, adding buying pressure, so near-term moves may be exaggerated. One day doesn’t make a trend. As more lockups are released and investors get their shares, expect more selling pressure.
Key points
- Lockup expirations increase float and SpaceX’s NASDAQ 100 weighting.
- Index fund buying offset sales by early investors.
- Short covering can exaggerate near-term moves.
- More lockup releases could bring more selling pressure.
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