The excitement that surrounded SpaceX's debut on the stock market has clearly faded. Friday extended a 10-day decline, with shares losing 5.5%. At one point, shares fell to $122.12, which is approximately 9% less than the $135 initial offering price that Wall Street banks like Morgan Stanley and Goldman Sachs used to bring the company to market.
The shares have dropped 44% from their peak intraday level of $225.64, and at one point hit a low of $122.12. That high came during a period when the Nasdaq-100 index was also less than 1% off its record. The Nasdaq-100 has since dropped 6% from that peak.
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The company's market cap still sits at roughly $1.6 trillion. Following the strong start after the IPO, Morgan Stanley and Goldman Sachs decided to secure another $11 billion in SpaceX equity. Now those shares are also underwater.
The IPO saw strong demand from institutional investors, leading to that subsequent $11 billion equity raise. However, the broader tech selloff and valuation concerns have since weighed on the stock, with the Nasdaq-100's decline amplifying the pressure.
Even as the stock falls, a lot of options money is moving around. By late Friday morning, more than 500,000 SpaceX options contracts had changed hands. That made SpaceX the 11th most-traded ticker in the options market, trailing names like Apple, Micron, VIX, and the small-cap ETF IWM.
The total premium - the money paid for those contracts - reached about $350 million. Of that, $290 million was tied to put options, which are bets that the stock will fall further. Seven of the top 10 most-traded contracts by volume were puts. One notable bearish position saw an investor purchase $2.6 million in 140-strike puts expiring today, while simultaneously selling the same number of 135-strike puts against it, reducing the net expense by $1.6 million.
But here is the twist. More than 50% of the option premiums from put contracts were actually sold rather than purchased. And SpotGamma and Cboe LiveVol data indicated that nine out of the ten biggest single trades were bullish.
Don Kaufman, who co-founded TheoTrade and previously directed operations at TD Ameritrade, commented, "People always feel like they miss out on these IPOs - look at the positive side of it, now you can go in there and get as much SpaceX as you want." He also noted: "I'm also surprised the banks that led this aren't selling off more." Kaufman added: "I've been selling way out-of-the-money puts. I'll buy it all day long at $100. Valuation will still be well over a trillion but it is what it is - a monster and will continue to be a monster."
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