SpaceX falls below $135 IPO price on valuation and AI fears
Early investors in SpaceX are facing paper losses after the stock slipped below its record $135 IPO price, weighed down by concerns over debt-fueled AI spending and stretched tech valuations.
SpaceX shares dropped below their $135 initial public offering price for the first time on Wednesday, leaving early buyers in the red just over a month after the record-breaking listing. The stock slid to an intraday low of $132.28 before recovering slightly to close at $135.27.
The breach of the IPO price marks a stark reversal for a company that briefly commanded a market valuation above $2.6 trillion following its debut. Investors who bought in at the offering price are now sitting on paper losses as the initial euphoria fades.
Market analysts attributed the decline to a confluence of profit-taking, elevated valuation concerns, and broader macroeconomic headwinds. Anxiety over the Federal Reserve potentially hiking interest rates is placing pressure on stretched technology valuations. Skepticism is also growing regarding the massive capital being poured into artificial intelligence infrastructure with uncertain returns.
Last month, SpaceX raised $25 billion in the bond market to fund its AI investments, joining a chorus of tech giants leveraging debt for such projects. “I think the elephant in the room is there’s a lot of folks that are in the stock and maybe some of them or a good number of them are wanting to take some liquidity, which is essentially putting a lot of pressure on the stock,” said Justus Parmar, CEO of Fortuna Investments. “You’re probably seeing a little bit of it and through the course of the year, we’ll be seeing more of that,” he added.
The company’s recent addition to the tech-heavy Nasdaq 100 index failed to arrest the downward momentum, with shares falling roughly 13% since inclusion. “There hasn’t been anything lately to remind people of some of the catalysts for why they bought SpaceX,” said Steve Sosnick, chief market analyst at Interactive Brokers. “The fact that a stock has fallen a couple of dollars below its IPO price in itself is not a tragedy, but SpaceX is heavily watched and has an important role in investor psyche,” he added.
The sustained losing streak provides ammunition for critics who argued the IPO valuation was fundamentally unsupported. SpaceX posted a loss of $4.9 billion last year, and its most ambitious long-term projects have yet to be proven at a commercial scale.
Wednesday’s dip is the latest chapter in a dramatic devaluation that has erased nearly $1 trillion from SpaceX’s market capitalization over three consecutive trading sessions. The collapse has heavily impacted the company’s founder, with Elon Musk’s net worth plummeting by an estimated $350 billion in roughly a week. Forbes estimates placed his net worth at approximately $1.4 trillion on June 16 before the decline reduced it to about $1.1 trillion.
