SpaceX shares have fallen 35% from their intraday high in the first month of trading, leaving retail investors who bought in the opening days nursing losses and prompting one analyst to compare the stock to a meme stock.
The company, co-founded by Elon Musk, made its public market debut on 12 June in what was the largest initial public offering of all time. Shares priced at $135 shot up to $150 on the first day, climbing as high as $176 before closing at $160.95. The following week, they hit an intraday record of $225, pushing SpaceX's total market value past Amazon and Microsoft.
“SpaceX shares fell 35% from peak in first month as earnings reality hit investors, analysts say.”
“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, agreed: “Everyone saw SpaceX as an AI story.”
The AI narrative stems from SpaceX's acquisition of Musk's AI start-up xAI, renamed SpaceXAI, and its leasing of data centre capacity to other tech companies. Yet its main business remains the manufacture and launch of rockets and Starlink satellites, a telecommunications network. When Starlink announced price cuts in Memphis, Tennessee amid local concerns over a massive data centre project, SpaceX shares fell 8% in a single day.
The reality of how the company currently makes money has come into sharper focus, and the stock has slid. On 7 July, when SpaceX was added to the Nasdaq100 index, the index fell 1.7% – but SpaceX dropped 4.4%. An earlier addition to the FTSE Russell index had given shares a slight boost.
By the end of its first month of trading, shares were selling at about $145, roughly 18% below the first-day high of $176 and 35% below the intraday peak of $225. Investors who bought during the first five days are looking at a potential loss on their investment. “If you bought around the first tick you're definitely underwater,” Snyder said.
Snyder added that the stock “started to look a lot like a meme stock”, pointing to the examples of GameStop and more recently Wendy's, where retail investors drive up a price through excited online chatter. He expects SpaceX to dip even further. SpaceX did not respond to a request for comment.