SpaceX (SPCX) stock has fallen about 29% over the past month and now trades below its initial public offering price of 5. Yet, Jim Cramer told viewers to hold off buying for now.

One key factor sits behind that call. Roughly 911.5 million shares become eligible for sale on August 6, and Cramer expects the supply to drag the price lower. When a large block of previously restricted stock suddenly becomes tradable, it can flood the market and weigh on prices until fresh demand absorbs it.

SPCX Sinks to New Lows, but Cramer Says Wait for Thursday’s Unlock

SPCX fell to 7.01 on Tuesday, its lowest level since the IPO. The stock then recovered to close at 6.41, up 2.56%. It now sits roughly 48% below its June 16 high of 5.64.

The slide underscores how freshly listed companies often trade with heightened volatility. In the weeks after an IPO, only a limited portion of a company’s shares circulate freely, so even modest shifts in demand can swing the price sharply. As more stock reaches the open market, that pressure tends to build.

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Yet, Cramer expects further downside. This is because the number of Nasdaq shares available for trading will rise sharply next week. Around 911.5 million shares will become eligible for sale next Thursday. That will more than double SpaceX’s public float — the slice of shares actually available to public investors.

“If you’re looking to buy SpaceX … I’m begging you if you want to go big to at least wait for the first wave of the lockup on insider selling to expire next Thursday and let it drag the share price lower before you pull the trigger,” he said.

A lockup expiration is a common post-IPO milestone. During the lockup period, insiders such as founders, employees and early backers are barred from selling their holdings. When that restriction lifts, some of them typically cash out, and the resulting supply can pressure the share price even when the underlying business is performing well.

Despite his long-term bullish view on Musk and SpaceX, Cramer cautioned that the company’s August 4 earnings report and the August 6 lockup expiration could drive further weakness in the stock.

“Even if they report a great quarter on Tuesday, I don’t know if it can withstand the lockup expiration on Thursday,” he added.

SpaceX reports after Tuesday’s close, its first set of numbers as a listed company.  Cramer said investors will closely watch its AI business, which has been boosted by multibillion-dollar computing deals with Anthropic and Alphabet. 

However, he noted the contracts can be terminated with 90 days’ notice, making “new revenue stream very tough to model.” He also questioned expectations for similar deals, warning that there “aren’t many other companies with such deep pockets.”

Cramer said both issues leave Wall Street’s multi-year earnings estimates hard to trust. For investors, the takeaway is patience: letting the lockup-driven selling run its course could offer a better entry point than chasing the stock ahead of two major catalysts.

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Source: BeInCrypto