Publier

To be honest with you about the SpaceX unlocking, most people probably have it all wrong. On August 6th, 911.5 million shares were unlocked, with a market value exceeding $100 billion. According to the general market expectation before, such a large volume of selling pressure would at least cause the stock price to take a hit, if not crash. So what happened? On the day of unlocking, the stock rose 6%, and on Friday, the non-farm payroll surged nearly 16%, pushing the price above $133. In two days, it rose a total of 23%. Citibank upgraded its rating to Buy with a target price of $220. The unlocking turned from a "big thunder" into "rocket fuel." This is completely opposite to what most people thought, and there are three reasons for this. First, the negative news had already been priced in. After the earnings report, SPCX fell to a new low of $108.27 since listing. Institutions that needed to exit had already done so, and short sellers had mostly sold off. When the unlocking actually happened, it became a "negative fully absorbed" event; after the last batch of panic selling cleared out, there were no new sellers. Second, shorts were covering their positions. Before unlocking, shorts held $24.6 billion in positions, accounting for over 30%. When the stock price rose instead of falling, these shorts were forced to buy back to cover, which in turn pushed the price higher, creating a positive feedback loop. Third, improved liquidity attracted institutions. Before unlocking, the free float was only 640 million shares; after unlocking, it nearly doubled. With a larger float, it became easier for big money to move in and out. Institutions like Citibank setting a $220 target price at this level is itself a signal. The non-farm payroll data also helped: employment turned negative, the probability of a rate hike dropped from 58% to 44%, and the 10-year US Treasury yield fell from 4.6% to about 4.2%. #PayrollsDropCPIFocus #AIMemoryStressTest #SpaceXUnlockRebound