SpaceX Stock Falls Below IPO Price Amid Launch Cancellation and Market Concerns
Five weeks after its historic IPO, SpaceX and its owner Elon Musk face a significant downturn as the company's stock price dropped below its initial offering price. On Thursday, SpaceX shares fell 4% to close at $131, dipping under the $135 IPO price for the first time. The decline continued on Friday with a 5.4% drop, closing at $123.99, valuing the company at approximately $1.6 trillion. Since the IPO on June 12, SpaceX's market value has shrunk by about $320 million, and by roughly $1 trillion from its peak of $2.6 trillion on June 16, when the stock reached $225 per share.
SpaceX joined the Nasdaq 100 index on July 7, which initially boosted demand from index-tracking funds. However, the recent stock decline followed the cancellation of a Starship rocket launch scheduled for Thursday, marking the first such cancellation since the company went public. Elon Musk explained on social media that some engines failed to ignite, leading to an automatic launch abort, with a new launch attempt planned for early next week.
Joe Gilbert, portfolio manager at Integrity Asset Management, noted that the failed launch timing was unfortunate and that failed launches always pose risks to the company's narrative. He added that investors are reducing risk exposure and recalibrating valuations as optimism fades, pushing down high valuation multiples. The drop in SpaceX shares also reflects broader weakness in high-value tech stocks amid concerns about sustained high U.S. interest rates and doubts over tech giants' ability to justify massive AI investments.
This freefall in SpaceX's stock could impact other tech IPO plans, including OpenAI's potential public offering, which may be postponed until 2027. Despite the recent declines, most Wall Street analysts remain bullish on SpaceX, with Bloomberg-tracked analysts predominantly rating the stock as a "buy." The average price target stands at $235 per share, suggesting a potential 90% upside from current levels.
