A month on from the largest initial public offering in history, SpaceX investors have swung from celebration to apparent concern as shares of Elon Musk's rocket company have lost nearly a fifth of their value since the first day of trading.
When shares in the firm became available on the public stock market on 12 June, there was an investor frenzy. The company had priced its shares at $135 each, but the price immediately shot up to $150, climbing to $176 before closing at $160.95. The following week, shares hit an intraday high of $225, meaning SpaceX had surpassed Amazon and Microsoft in total market value.
“SpaceX shares have fallen 35% from their peak a month after record IPO, leaving early retail investors at a loss.”
“With Elon Musk, any company he touches gets people excited,” said Keith Snyder, analyst at investment research firm CFRA. “But this was also the first time people felt like they were able to invest in something that was being marketed as an AI play.”
Willy Lee, an investor at Neosteller, which facilitates individual investors putting money into private companies, agreed that the excitement around the IPO was very much around artificial intelligence. “Everyone saw SpaceX as an AI story,” he said.
SpaceX earlier this year acquired Musk’s AI start-up xAI, recently renamed SpaceXAI and best known for the controversial chatbot Grok, and also started leasing data centre capacity to other tech companies. But its main business is the manufacture and launch of rockets and telecommunications satellites called Starlink.
When Starlink said it was cutting prices in the Memphis, Tennessee area amid local concerns over a massive data centre project, SpaceX shares fell on the day by 8%. As the reality of how SpaceX currently makes money has seemed to come into clearer focus, the company's shares have started to sink.
Even amid a tumultuous couple of weeks for tech stocks, SpaceX has taken a particular hit. When it was added to the Nasdaq100 index on 7 July, although the index closed down 1.7%, SpaceX fell 4.4%. An earlier addition to the FTSE Russell index had given the shares a slight boost.
At the end of its first trading month, shares of SpaceX were selling at around $145 each, roughly 18% less than the high on its first day of trading, and 35% less than its peak so far. Such a drop in price means that retail investors who purchased SpaceX stock during its first five days of trading are looking at a potential loss on their investment.
“If you bought around the first tick you're definitely underwater,” Snyder said. “It started to look a lot like a meme stock,” he added, pointing to the examples of GameStop and, more recently, Wendy's, where retail investors drive up a stock price through little more than excited online conversation. He expects SpaceX to dip even further.