SpaceX shares cool after record IPO as valuation worries grow

In short: SpaceX shares jumped after a record IPO, then turned volatile as investors questioned the price, the risks, and the company’s AI spending plans.

What's going on

SpaceX went public on June 12 in what was described as the largest IPO in history, raising about $75 billion at $135 per share. The stock opened around $150 and ended the first day up roughly 19 to 20 percent, near $160 to $161. Over the next two weeks it climbed to an all-time high near $225, then started swinging sharply and pulling back.

Recent moves show how choppy trading has been. One day the stock fell about 8 percent to around $157.50. In another stretch, it dropped 16 percent in a single day to about $154.60, and was down about 23 percent over three sessions, even though it was still above the IPO price.

Several forces are behind the stall. First, investors are debating SpaceX’s valuation, which briefly topped $2 trillion, even though the company is not yet profitable and reported a large quarterly loss. Second, only about 4.2 percent of shares were available to trade at the start, which can make prices jump around (like a small number of concert tickets being resold, where one big buyer or seller can move the price).

Investors are also watching Musk’s expanding AI plans, including raising more money and taking on debt, which could be expensive and uncertain.

What to watch

Analysts are still broadly positive, with an average price target around $203. Index providers like Nasdaq and FTSE Russell have said they will fast-track SpaceX into major indexes, which can lead index-tracking funds to buy shares over time. The big question is whether SpaceX can turn its AI and space ambitions into steady profits that justify its current price.

Source: NYTimes