- SpaceX shares have fallen about 20% below their $135 IPO price since June
- The stock peaked at $225.64, valuing SpaceX near $3 trillion post-IPO
- Concerns include high valuation, rising debt, and upcoming lock-up expiry
Just over six weeks after delivering the biggest IPO in U.S. history, SpaceX has gone from being Wall Street's hottest stock to one of its biggest disappointments.
Shares of Elon Musk-led SpaceX have fallen about 20% below their IPO price of $135, extending a steep selloff that has erased nearly $1.2 trillion in market value from the company's post-listing peak.
The stock recently touched an intraday low of $108.66, compared with a record high of $225.64 reached shortly after its Nasdaq debut in June.
The decline has reduced SpaceX's market capitalisation to around $1.5 trillion, down from nearly $3 trillion at its peak, although the company remains among the world's most valuable listed firms.
Biggest IPO Meets Reality
SpaceX priced its IPO at $135 per share on June 11, raising a record $75 billion by selling 555.56 million shares. The listing valued the company at $1.77 trillion, making it one of the largest public companies from day one. Elon Musk retained roughly 82% voting control after the offering.
Investor enthusiasm initially pushed the shares above $225, briefly valuing the company above Microsoft and Amazon despite reporting a $4.9 billion net loss in the previous year and generating significantly lower revenue than established technology giants.
ALSO READ: Elon Musk's SpaceX Nails First Starship Test Flight Since IPO With Successful Splashdown
Why is the Stock Falling?
Several factors have combined to pressure the stock.
The biggest concern is valuation. Investors are questioning whether SpaceX's premium valuation can be justified while the company continues to spend heavily on artificial intelligence, Starlink expansion and next-generation space infrastructure.
Last month, SpaceX also raised $25 billion in the bond market to fund AI infrastructure and data centre expansion. Rising debt levels and concerns that higher U.S. interest rates could reduce the appeal of expensive growth stocks have further weakened investor sentiment.
Another major overhang is the upcoming lock-up expiry, which will allow employees and early investors to begin selling previously restricted shares. Market participants fear the additional supply could put further pressure on the stock.
The company's first quarterly earnings report as a public company is scheduled for August 4, and investors are waiting for detailed financial results before rebuilding positions.
Short Sellers Make Billions
The sharp decline has also rewarded investors betting against the stock. Short sellers have made an estimated $15.5 billion in paper profits since SpaceX's post-IPO rally reversed.
Around 360 million shares, representing nearly 56% of the company's free float, are currently on loan to short sellers. It indicates that bearish sentiment remains elevated.
Analysts Still See Upside
Morgan Stanley analyst Adam Jonas believes the current share price largely reflects the value of SpaceX's launch business and Starlink satellite internet operations, while assigning little value to its AI ambitions.
He estimates the core businesses alone are worth around $136 per share and maintains a $300 price target, expecting AI-related revenue to become a much larger contributor over the coming years.
The August 4 earnings report, debt-funded expansion plans and lock-up expiry are expected to determine whether SpaceX can regain investor confidence after one of the fastest reversals ever seen following a blockbuster IPO.
ALSO READ: Money Won't Matter In 2036, Elon Musk Makes Bold Claim; Explains Why
Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.
