It’s been a crazy ride for Space Exploration Technologies Corporation, or SpaceX (LSE: SPCX), stock. Having entranced investors with last month’s record-breaking rating IPO, the shares are falling at speed.
All the hype has led investors into a world of hurt. The shares were priced at $135 at launch on 12 June. Four days later, they hit an intra-day high of $225.6. Yesterday (23 July) they slumped to $111.8. That’s a peak-to-trough drop of just over 50%. My condolences to those who bought at the top.
It means that Elon Musk is no longer a trillionaire, although he still has the consolation of still being the world’s richest man. So what should investors do now?
Why did this tech share fall to earth?
When a share plunges like this, there are always two ways of looking at it. As a total nightmare or a buying opportunity. Which is it?
I’m wary of IPOs as a rule. Newly launched stocks take time to find their true value. Even if they fly, there’s a risk that profit takers emerge. SpaceX came with lock-ins to protect investors. It wasn’t enough. Others hoped that a wave of buying by US index trackers would support the share price. That hasn’t been enough either.
I’m not being wise after the event here. On 4 June I urged The Twelfth Magpie users to tread carefully saying “we’re entering uncharted territory”.
I warned that we were being asked to believe in a company that lost almost $5bn last year, then another $4bn in the first quarter of 2026 as artificial intelligence operation xAI blasted through capital. I feared Musk was only bringing it to market because he needed the cash.
Yet I also accept that this is a thrilling company. It’s performed a great leap for space exploration by making rockets reusable. Satellite internet constellation Starlink does make money. And Musk’s army of fans aren’t just going to desert him.
Is this the right time to buy?
Some of the sell-off has nothing to do with SpaceX itself. US tech is slipping generally amid concerns over the potential AI bubble. Iran war uncertainty is playing a major part, as the oil price rebounds to $100, threatening higher inflation and interest rates. That will squeeze growth companies generally, by upping their borrowing costs and eroding the real value of their future cash flows.
Any Middle East peace deal would reverse that gloomy outlook pretty quickly, and potentially light a fire under SpaceX.
Brave, contrarian investors will be tempted to take advantage of the SpaceX backlash. Sentiment has swung wildly, and could easily swing back again. From that angle, I think the shares are worth considering. If tempted, I’d suggest investors feed money in gently, in case SpaceX has further to fall.
Cautious investors will find more secure opportunities on the FTSE 100. In contrast to SpaceX, plenty of UK blue-chips are making profits, and paying dividends as well. SpaceX does neither, and won’t for a good while yet. Until then, the volatility is likely to continue.
Should you invest £5,000 in SpaceX right now?
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Harvey Jones does not hold any positions in the companies mentioned.
