Retail investors dispose of SpaceX shares for first time on Aug 7, with $5.8m in net sales

Retail investors who spent weeks defending SpaceX through its post-IPO run turned net sellers on Aug 7, marking the first such instance since the company’s blockbuster debut in June.

Mom-and-pop traders sold a net US$4.5 million (S$5.8 million) in Elon Musk’s rocket company, the first net negative reading since the company went public on June 12, according to Vanda Research data.

“A shift from persistent net buying to selling is rarely about one catalyst, it is usually a mix of profit-taking, position fatigue and investors reassessing the risk-reward,” said Sam North, market analyst at eToro.

“Friday is particularly interesting because retail turned net sellers while the shares were rebounding strongly and trading back around the IPO price. That looks more like investors using strength to take some money off the table than panic selling.”

By comparison, the highest single-day net buying in SpaceX’s trading history reached US$144.6 million on June 16, suggesting the outflow remains modest by the stock’s own standards.

This comes just days after individual investors “bought the dip” as shares slumped 13.6 per cent on Aug 5, when retail net-buying was the fourth-highest since the company’s June debut.

Shares had dropped as investors reacted to SpaceX’s first-ever quarterly earnings report as a public company, in which it touted faster returns from AI spending, but concerns remained about how long its profitable Starlink business would bankroll costly investments in artificial intelligence.

The reversal in sentiment tracks a broader unwind in SpaceX’s share price. The stock surged as much as 67 per cent above its US$135 IPO price in June before giving back all of the gains and falling more than 22 per cent below its debut price earlier in August.

Shares were last up 1.4 per cent at US$134.95 in early trading after surging nearly 23 per cent last week.

Despite the recent jump, its shares have closed below the IPO price every day since July 16.

Small investors have been crucial in the company’s history on the public markets, as at least 30 per cent of shares that were made available on debut were set aside for retail buyers.

Jai Malhi, senior equities strategist at Vanda, estimates that retail traders on average paid US$147 for SpaceX shares since the IPO, so “the selling may have been a function of cutting losses at an opportune time”.

In the last one week, SpaceX was the second most mentioned ticker on Reddit forum r/WallStreetBets, per sentiment aggregator SwaggyStocks.

Liquidity conditions have also changed as the number of SpaceX shares available for public trading more than doubled following the expiry of the first of several lock-up restrictions last week. REUTERS