SpaceX shares hit an all-time low this week, with the post-IPO rally stalling as investors await the company's first earnings report and a major lockup expiration. The stock experienced dramatic swings, plunging to a record low before staging a brief recovery and then weakening again.

Following several weak trading sessions, the stock continued its decline Friday morning. On Monday, the shares touched an all-time low of $108.66, closing down 1.4% at $113.50. A 2.6% rebound on Tuesday was followed by renewed pressure midweek, resulting in a cumulative weekly decline of approximately 5%. Since its official listing at $150 last month, SpaceX shares have fallen nearly 30%, and are down almost 50% from their all-time high of $225.64.

This volatility comes ahead of SpaceX's second-quarter earnings report, scheduled for release on August 4. A more significant overhang is the lockup period expiration on August 6, which will allow up to 20% of shares to be freely traded. Many investors are concerned that the increased supply of stock will continue to pressure prices.

Adding to the uncertainty, reports indicate that CEO Elon Musk is still pursuing a merger between SpaceX and Tesla (TSLA). The Wall Street Journal reported on Friday that management from both companies is discussing how to handle Tesla's operations in China if the merger proceeds. Given SpaceX's extensive contracts with the U.S. government and defense departments, this raises concerns in China.

Citing sources, the Wall Street Journal stated, "As a major U.S. defense contractor, SpaceX, once merged, would control Tesla's China factory. The factory's technology, processes, and supply chain could be potentially diverted for U.S. military use. The merger plan between SpaceX and Tesla is likely to face strict scrutiny from China."

Another concern for China, according to sources, is that SpaceX (and by extension the U.S. government) could gain access to data from Tesla's 2 million car owners in the country.

Beyond the merger rumors, analysts at Visible Alpha, part of S&P Global, led by Melissa Otto, suggest that when SpaceX reports earnings next week, the market will focus intently on the company's capital expenditure data. "Market expectations are for SpaceX's capital expenditure to rise from $48.7 billion this year to $118.4 billion by fiscal year 2028," Otto noted. "Additionally, the company's total debt is expected to expand more than fivefold, from $41.7 billion this year to over $218 billion by fiscal year 2028."

Similar to leading AI startups, Oracle, Google parent Alphabet, and Meta Platforms, there is growing concern about the potential for poor returns on SpaceX's massive investments. The company is heavily investing in AI infrastructure, but the sheer scale of the spending raises doubts about whether it will eventually generate a stable and reasonable return on investment.