Wall Street took Elon Musk to orbit, but gravity always wins in the end.
Just a month after the most hyped initial public offering in stock market history, Space Exploration Technologies (trading under the ticker SPCX) has officially fallen below its $135 IPO price. On Wednesday, the stock slid to an intraday low of $132.15. That is a massive drop from its post-debut peak of $225, wiping out hundreds of billions of dollars in paper wealth almost overnight. Expanding on this idea, you can find more in: Why Hungarians Are Angry About A Former Foreign Minister Corporate Jump To Byd.
It is the classic Wall Street lifecycle. The hype machine pumps a stock to the moon, retail investors rush in hoping to make a quick fortune, and then the realities of the balance sheet hit.
If you bought the SpaceX hype at the peak, you are probably staring at a 40% loss on your screen. But this is not just another story of a volatile stock taking a breather. What is happening right now with SpaceX is a massive confidence test for the entire market. It is a warning sign that the era of valuation-by-meme is hitting a very hard brick wall. Observers at Bloomberg have shared their thoughts on this matter.
The Trillion-Dollar Hangover
Let's look at how we got here.
When SpaceX went public on June 12, it raised a staggering $75 billion at $135 a share. It was the biggest IPO ever recorded, valuing the rocket and satellite business at $1.8 trillion out of the gate. For a brief moment, as retail frenzy pushed the stock above $200, the company’s valuation blew past $2.6 trillion. That put it right up there with cash-printing giants like Microsoft and Amazon. It also technically made Elon Musk the world's first trillionaire, at least on paper.
But let's be real. Comparing SpaceX to Microsoft is absurd.
Microsoft is a software powerhouse that sits on a mountain of high-margin recurring revenue. SpaceX is a capital-intensive manufacturing and infrastructure business. Launching reusable rockets and deploying thousands of low-Earth orbit Starlink satellites is incredibly expensive.
The market has suddenly remembered that building space infrastructure requires actual cash.
Just last month, SpaceX went to the bond market to raise $25 billion to help fund its massive infrastructure build-out. It turns out that running a rocket company, an orbital satellite network, and trying to build out massive artificial intelligence data centers in space requires more cash than even a record-breaking IPO can provide.
When a company is losing billions of dollars a year—specifically, a $4.9 billion annual loss for SpaceX—and has to immediately borrow $25 billion after raising $75 billion, smart money starts asking questions.
The Myth of the Space and AI Convergence
Part of the massive run-up in SpaceX’s stock was driven by Musk’s narrative that the company is not just a rocket launcher, but an AI compute play. The pitch was that putting data centers into orbit using Starlink’s network would bypass terrestrial energy and cooling constraints.
It sounds amazing. But the reality is that space-based AI is years, if not decades, away from being commercially viable.
Right now, Wall Street is growing increasingly skeptical of massive, debt-funded AI capital expenditure across the entire tech sector. Investors are demanding to see returns on these AI investments today, not in 2035. SpaceX’s slide below its IPO price is a direct result of this broader shift in investor sentiment.
Skeptics like GMO co-founder Jeremy Grantham have gone as far as calling the SpaceX listing one of the craziest IPOs in history, pointing out that retail enthusiasm rather than business fundamentals drove the initial surge. When a stock behaves more like a meme stock than an institutional anchor, institutional investors tend to walk away.
The Nasdaq-100 Curse is Real
Here is a detail that most retail investors completely missed. On July 7, SpaceX was added to the prestigious Nasdaq-100 index.
On paper, this seemed like a massive win. Being added to the index means passive exchange-traded funds (ETFs) like the Invesco QQQ Trust are forced to buy millions of shares of SPCX to track the index. Many retail investors bought in right before the inclusion, expecting a massive "index pop."
But historical data shows a different pattern. New entrants to the Nasdaq-100 actually tend to underperform the broader index over the 12 months following their inclusion. Why? Because by the time a company is added to a major index, its valuation is usually incredibly stretched. The inclusion often marks the absolute peak of buyer exhaustion.
That is exactly what we are seeing play out. SpaceX entered the index, the passive buying pool was exhausted, and there were simply no buyers left at the top. The stock broke below its $150 opening price in late June and has now shattered the crucial $135 psychological floor.
What Happens Next
If you are holding SpaceX stock, or thinking about buying the dip, you need to look at what is coming down the pipeline.
The biggest near-term threat to the stock price is the upcoming lockup expiration.
When a company goes public, early investors, employees, and insiders are typically barred from selling their shares for a set period—usually 90 to 180 days. When that lockup expires, a massive wave of new shares hits the market. Given that SpaceX’s public debut made overnight millionaires out of thousands of employees, there will be immense pressure on those insiders to cash out and diversify their wealth.
If the stock is already struggling to maintain its $135 IPO price with the current float, what do you think will happen when millions of insider shares suddenly flood the market?
Furthermore, macroeconomic pressures are not helping. Stretched tech valuations are highly sensitive to monetary policy. If the Federal Reserve keeps interest rates elevated or hints at future hikes to combat persistent inflation, capital-intensive companies like SpaceX that rely heavily on debt will see their borrowing costs rise even further.
If you want to navigate this volatility, here are the practical next steps to take:
- Watch the lockup expiration date closely. Do not buy the dip before the insider selling window opens. Let the market absorb that supply first.
- Ignore the AI narrative for now. Evaluate SpaceX purely on its core revenue drivers: commercial satellite launches, government contracts, and Starlink subscriptions. If those fundamentals do not justify a $1.75 trillion valuation to you, stay on the sidelines.
- Monitor bond yields. If SpaceX has to return to the debt market again to fund Starship development, rising interest rates will eat directly into its future profitability.
