SpaceX loses $1 trillion in value as shares fall amid post-IPO launch setback

SpaceX’s $1 trillion nightmare

Remember when everyone was talking about SpaceX’s record-breaking IPO? That feels like ages ago now. The rocket company has lost more than $1 trillion in market value since its mid-June peak, and investors are feeling the pain.

The stock hit a peak near $225 per share on June 16, when SpaceX briefly ranked among the largest U.S. public companies by market value. By Friday, shares were trading around $125, down sharply from that high point, and the company’s market value had dropped from roughly $2.7 trillion to about $1.63 trillion.

The honeymoon is officially over

SpaceX went public on June 12 at $135 per share, raising about $75 billion in one of the biggest public debuts ever. For a few days, the stock soared, and excitement was through the roof.

That excitement has evaporated. On July 15, shares slipped below their IPO price for the first time. By Friday, the stock was trading under $125. Investors who bought in at the peak have watched their investments shrink dramatically, and the company’s shine on Wall Street has faded.

Starship scrub sends stock plunging

What made things worse? SpaceX had to cancel the 13th test flight of its massive Starship rocket on July 16. The company called off the launch because some engines would not ignite properly, triggering an automatic abort.

Elon Musk initially said SpaceX would replace 2 Raptor engines and try again early the next week, but the launch attempt has since been rescheduled for Thursday, July 23. Shares fell after the scrub, adding to investor concern about Starship’s return to flight.

Why does this rocket matter so much?

Starship isn’t just any rocket; it’s the backbone of SpaceX’s entire future. The 400-foot-tall reusable vehicle is designed to carry next-generation Starlink satellites and eventually land NASA astronauts on the Moon.

The company has already poured over $15 billion into developing Starship. Any delay directly affects plans to expand Starlink and to launch cheap satellites into orbit more quickly. With so much riding on this single rocket, it’s easy to see why investors get nervous when things don’t go smoothly.

SpaceX’s AI ambitions face reality check

SpaceX pitched itself as an AI powerhouse during its IPO, with plans to put data centers in space. The company sees a potential market opportunity of $26.5 trillion here. But investors are starting to wonder if these dreams are getting ahead of reality.

The company is in talks to sell computing power to the Defense Department, and already has deals with Google and Anthropic. Still, the recent stock slump suggests Wall Street wants to see more concrete progress before getting too excited again.

Bears are betting against the rocket maker

Here’s something that’s making things worse: Short-sellers are piling onto SpaceX. They’ve taken about one-third of the publicly available shares and are betting the stock will keep falling.

This creates additional selling pressure, pushing prices down even further. With so few shares actually available to trade publicly, less than 5%, these bets can have an outsized impact on the stock price. It’s a tough situation for regular investors who bought in hoping for steady growth.

Lock-up expiration could add pressure

Here is the scary part for current shareholders: most SpaceX shares remain restricted because less than 5% of the outstanding shares are available in the public float. Employees and early investors face post-IPO selling limits.

A major wave of shares is expected to unlock after SpaceX’s Q2 earnings on August 17. If investors are not eager to absorb the additional supply, the stock could face more pressure as more restricted shares become eligible for sale.

Competition is heating up

SpaceX is no longer the only player chasing reusable rocket technology. China recently tested an experimental sea-based rocket-booster recovery system using a net attached to an offshore platform.

That competition adds pressure as SpaceX tries to prove its value to public investors. If more countries and companies adopt reusable launch systems, SpaceX could face a more crowded market over time.

Analysts say don’t count SpaceX out yet

Despite all the bad news, most Wall Street analysts are still optimistic. More than 80% of analysts tracked by Bloomberg recommend buying SpaceX stock, with an average price target of $235.34, about 90% above current levels.

One analyst even set a target of $800 per share. They argue that Starship’s cost reductions will eventually make SpaceX’s ambitions possible, including space data centers and Mars missions. They’re telling investors to be patient and ride out the current turbulence.

The public can’t buy most SpaceX stock

Have you wondered why the stock swings so wildly? It’s because fewer than 5% of SpaceX shares are available for public purchase and sale. This scarcity attracted huge interest during the IPO frenzy.

But it also means the stock is more volatile. When bad news hits, there aren’t enough buyers to stabilize the price quickly. And with the lock-up expirations coming, this limited supply will finally start to expand. That could be good or bad, depending on whether demand keeps up.

A Nasdaq-100 tailwind is coming

Here is some good news: SpaceX was fast-tracked into the Nasdaq-100 after its June 12 IPO under rules that allow major new listings to qualify after 15 trading days. That means passively managed funds tracking the Nasdaq-100 may need to buy the stock.

J.P. Morgan estimated the index inclusion could generate about $4.3 billion in passive inflows. While that is not enough to reverse the entire downtrend on its own, it does create a source of index-linked demand for SpaceX shares.

The failed launch was bad timing

The timing of the canceled Starship launch could not have been worse. Just days earlier, the stock had already slipped below its IPO price for the first time. Investors were already nervous, and the delay gave them another reason to sell.

As one portfolio manager put it, “The timing isn’t ideal for the company’s narrative.” Even though launch setbacks are part of the space business, public-market investors do not always have the patience that private investors have.

Curious about the politics behind all this? Check out Trump praises SpaceX executive’s $325 million gift.

The road ahead for Elon Musk’s company

So what happens now? SpaceX is targeting another Starship launch attempt on Thursday, July 23, and a successful flight could give the stock a much-needed boost. The company also has government contracts and growing Starlink revenue to fall back on.

But the next few months will be critical. With share unlocks looming and competition heating up, SpaceX needs to prove it can deliver on its enormous promises. For now, investors are waiting nervously to see if the company can recapture some of its IPO magic.

Want to know where Musk sees SpaceX heading from here? Check out Elon Musk’s signals on a possible public future for SpaceX for all the details.

Will SpaceX stock bounce back or keep falling? Drop a comment and give this post a thumbs up.

This slideshow was made with AI assistance and human editing.

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