Key facts
- SpaceX's IPO saw shares initially price at $135, rise to $150 on the first day, and hit a peak of $225.
- The stock has since fallen to around $145, a 35% drop from its peak.
- Investors who bought shares in the first few days of trading are currently 'underwater' on their investments.
- The company acquired AI startup Cursor in an all-stock deal valued at $60 billion.
- Morgan Stanley initiated coverage with a $300 price target.
SpaceX investors have experienced significant volatility in the month following its initial public offering (IPO), with shares swinging from initial celebration to apparent concern. When shares became available to the public on June 12, pricing at $135, they immediately surged, closing the first day at $160.95 and reaching an intraday high of $225 the following week, surpassing Amazon and Microsoft in market value.
Analysts attribute the initial excitement partly to Elon Musk's involvement and the company's marketing as an artificial intelligence (AI) play, especially after its acquisition of Musk's AI startup xAI, recently renamed SpaceXAI and known for its chatbot Grok. However, as the company's core business of rocket manufacturing and Starlink satellite launches came into sharper focus, its share price began to decline.
SpaceX shares fell 8% on news of Starlink cutting prices in Memphis, Tennessee, amid concerns over a data center project. The stock also dropped 4.4% on July 7, despite the Nasdaq100 index closing down 1.7%. By the end of its first trading month, shares were trading around $145, approximately 35% below their peak.
This decline means that retail investors who purchased shares early on are likely facing losses. Keith Snyder of CFRA noted the stock began to resemble a 'meme stock' and expects further dips. Samuel Kerr of Mergermarket differentiated between IPO investors, who are likely doing fine, and those who bought in the first few days, who are unhappy.
Despite the share price volatility, Elon Musk has expressed enthusiasm for SpaceX's business prospects. The company notably used its stock's surge on June 16 to acquire AI startup Cursor in an all-stock deal valued at $60 billion, a move Kerr described as demonstrating significant market sophistication.
Morgan Stanley, a lead underwriter for the IPO, remains optimistic, initiating coverage with a $300 price target. SpaceX, which reported $18 billion in revenue last year and operates at a loss, is anticipating its first public earnings report in early August. This report, coinciding with the end of a lock-up period for employee shares, could lead to further price swings.