After Space Exploration Technologies Corp (NASDAQ: SPCX) stock floated at $135 on 12 June, it skyrocketed. In the biggest initial public offering (IPO) in history, SpaceX sold $86bn of shares at a valuation above $2trn.
On their first day, the shares surged to $176.52, before closing at $160.95. The stock kept soaring, hitting a record $225.64 on 16 June. This left the shares 67.1% above their flotation price. But SpaceX has since come crashing back to Earth.
SpaceX slumps 40%
Currently, SpaceX shares are $135.27, just above their IPO price. This has collapsed the market valuation from $3trn to $1.8bn, with $1.2bn evaporated. This might be the largest and fastest loss of market value for any one company in history.
Buyers of SpaceX stock should have known that shares in Elon Musk ventures would be volatile, right? I suspect that many are shell-shocked by how rapidly their gains evaporated, wiping out their profits since 12 June. Even buying the shares at their Wednesday low of $132.15 would generate a tiny 2.4% gain to date.
The real winners from SpaceX’s flotation have been insiders, Musk allies and those buying shares well before the IPO. Also, the 20+ investment banks involved in the float collected $500m in total fees.
The biggest winner by far is Musk, pulling off his most spectacular feat. Tesla‘s Technoking has turned a loss-making private company into the #7 US-listed public company. Though Musk owns only 42% of SpaceX stock, he controls 85% of total voting rights, handing him absolute power over this business. Abracadabra!
To the moon?
SpaceX’s valuation defies all investing principles. As I warned on 9 June, SpaceX has minimal revenues and is loss-making. For 2025, revenues across SpaceX, Starlink, X, and xAI were $18.7bn. Collectively, these four firms lost $4.9bn last year, with only Starlink making any profit.
With no fundamentals to rely on, SpaceX’s valuation is built on hype, hope, and faith. With future cash flows set to be shockingly negative for a decade, SpaceX promises to deliver ‘space jam tomorrow’. Yet shareholders’ biggest worry could be the $75bn of corporate bonds (company debt) issued shortly after the IPO.
This debt now trades close to ‘junk’ levels after SpaceX bond prices plunged. Debt investors are notoriously conservative relative to shareholders. Bondholders demand only two outcomes: to collect all of their coupons (interest), followed by full repayment of their loans.
With shareholder optimism damaged and SpaceX bond prices equally dented, I fear for the shareholders. Pipe dreams of moon bases, orbiting AI labs, and life on Mars are little more than sci-fi tales. In reality, I’d warn SpaceX’s owners to brace for the roughest of rough rides — particularly when share lock-ups expire and smart insiders start selling stock.
In the battle between the snake-oil salespeople of finance and the laws of physics, I expect the latter to win. Of course, I could be wrong and SpaceX could announce mind-bogglingly strong progress when releasing its first results as a public company in early August.
Indeed, I expect Musk to repeat his prior claim that SpaceX is poised to become the largest business on Earth. But if that outcome actually happens, then this space nerd will eat his huge collection of sci-fi novels, live-streamed!
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Cliff D’Arcy has no position in any of the shares mentioned.
