(June 16): SpaceX jumped for a third straight day on Tuesday, putting it on track to overtake Amazon.com Inc in value and briefly making it the world’s fourth largest stock ahead of Microsoft Corp.
Shares were up about 10% at 11.40am in New York, paring some of a gain that had reached as much as 17% earlier in the session. That puts its market value at US$2.8 trillion ($3.59 trillion), more than US$100 billion above Amazon’s. At its intraday high, the market value of Elon Musk’s rocket and AI company reached nearly US$3 trillion.
At least some of the price action since its debut has been driven by the relatively small number of SpaceX shares available to trade, with only about 4.2% accessible on day one. That can make trading more volatile, with the stock more prone to large swings that can quickly change its market value.
“That is a factor. We’re talking about a company that has very limited shares available for the public versus the headline market capitalisation,” said Angelo Kourkafas, senior global investment strategist at Edward Jones.
SpaceX announced Tuesday that it has formally agreed to take over Cursor in a deal that values the AI coding startup at US$60 billion. Cursor investors will have the right to receive SpaceX stock based on the implied equity value of Cursor, according to a company filing.
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The gains in SpaceX shares are a sign of consistent investor demand for the stock, calming fears that the record IPO would be too large for the market to digest. The performance paves the way for potential public offerings this year from artificial intelligence competitors Anthropic PBC and OpenAI, both expected to be in the US$1 trillion valuation range.
Retail traders have also been a key driver of the hot start, buying as much SpaceX stock over its first two days of trading as they purchased across the entire US stock market last week, according to data from Vanda Research.
Tuesday also marked the start of trading for SpaceX options contracts on exchanges including Cboe Global Markets Inc. and Nasdaq Inc, an event that could stoke even more volatility in the stock. Other options exchanges, including those owned by Intercontinental Exchange Inc’s NYSE and Miami International Holdings Inc, are also expected to list early next week.
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When traders buy calls, market makers on the other side of the trade hedge their risk by purchasing shares equivalent to their derivatives exposure. That exposure rises as shares rally, potentially forcing the market makers to pick up additional shares to keep positions balanced, adding to momentum.
More than 850,000 lots of options traded as of 11.40am in New York as traders jumped in to bet on further gains in SpaceX.
Still, market watchers anticipate shares will face increased downside pressure once insiders are able to sell more stock as so-called lock-up agreements begin to expire later this year.
“When that booster rocket of retail demand falls off, what happens when they start hitting the gravity of institutional investors and employees post lockup starting to sell?” said Max Gokhman, senior vice president at Franklin Templeton Investment Solutions. “That’s really where that marginal buyer becomes increasingly important because now you’re increasing the float.”
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