SpaceX market cap loss tops $1.2 trillion from June peak

SpaceX’s market cap loss has exceeded $1.2 trillion since the stock reached $225.64 in June, CNBC reported, a decline roughly in line with the market value of Elon Musk’s Tesla. The shares fell 1.36% on Monday to close at $113.50, marking the 13th down session in the past 16 trading days.

The move extends a sharp reversal in one of the market’s most closely watched newly public companies. Tesla, Musk’s other listed company, has also been under pressure, with CNBC reporting that its shares recently traded near one-year lows.

In after-hours trading, SpaceX was quoted at $112.94, down a further 0.49%, according to the CNBC market data shown for the stock.

What is driving SpaceX options trading?

Options activity showed a split market, with some traders positioning for further weakness while several of the largest premium trades leaned neutral to bullish, according to CNBC’s account of Cboe LiveVol data. Options give buyers the right, but not the obligation, to buy or sell a stock at a set price before expiration; the premium reflects what traders pay or receive for that exposure.

CNBC reported that traders bought 106,000 calls and 77,000 puts on Monday, while most of the $442 million in premium was linked to puts. Calls generally benefit from a rise in the underlying stock, while puts generally benefit from a decline, though spread trades can create more complex payoffs.

The most active contract by volume was a call option with a $330 strike price expiring Friday, according to ThinkOrSwim data cited by CNBC. The contract traded for 10 cents and carried about a one-third of 1% probability of finishing profitably, according to that data.

Cboe LiveVol data cited by CNBC showed that four of the five largest trades by premium were neutral or bullish. Those included two large sales of put spreads, with one trade involving a sale of in-the-money put spreads that would require a rebound in SpaceX shares, CNBC reported. Another trader collected $1.8 million by selling 5,200 of the $100-strike puts expiring Oct. 16 and buying 7,000 of the $85-strike puts with the same expiration, according to the report.

Charles Moon, a technology and momentum specialist at Prosper Trading Academy in Chicago, told CNBC that Wall Street is penalizing artificial intelligence-linked stocks over capital expenditure concerns. “As an investor it’s early – as a trader, Wall Street is now punishing the AI stocks for capex,” Moon said.

When can SpaceX locked-up shares be sold?

SpaceX is due to post its first earnings report since its initial public offering on Aug. 4, according to the company’s investor relations release cited by CNBC. The report also starts the clock on a partial lock-up expiration.

A lock-up restricts certain holders from selling shares for a period after an IPO, limiting immediate supply in the market. SpaceX investors will be able to sell 20% of eligible locked-up stock, up to 911.5 million shares, on the second full trading day after the earnings release date, which CNBC identified as Aug. 6.

Moon told CNBC he did not expect the SpaceX lock-up to be as severe as feared, while adding that it was unlikely to help sentiment. The coming earnings report and potential new supply leave traders focused on whether volatility remains elevated after the company’s first quarterly update as a public company.

This story draws on original reporting from CNBC.