Key facts
- SpaceX shares have fallen over 20% from their post-IPO high.
- The company's market value has decreased by billions.
- Elon Musk is no longer a trillionaire.
- Tesla's IPO is highlighted as a strong benchmark for early investor returns.
- SpaceX's inclusion in major index funds provides passive investors with exposure.
SpaceX shares have fallen more than 20 per cent from their post-initial public offering high, a decline that has erased billions from the company's market value and pushed founder Elon Musk below the trillionaire mark. The volatile start to public trading for Musk's space exploration company has led investors to draw comparisons with Tesla, whose early shareholders have experienced significant returns.
Analysis by trading platform Taurex found that a $1,000 investment in Tesla's 2010 IPO would now be worth over $24,000, making it the best-performing company in the study. Adobe and Nvidia also showed strong long-term returns for early investors.
Lale Akoner, global market strategist at Etoro, noted that Tesla's success was driven by its ability to expand its market and improve margins, despite initial skepticism. She sees similar characteristics in SpaceX, including a strong founder-led narrative, large global markets, cost advantages in launch services, Starlink's growth, and potential in AI. However, Akoner cautioned that SpaceX's current valuation already reflects substantial future expansion and enthusiasm for Musk.
The recent performance of SpaceX shares follows a typical IPO pattern, with an initial surge followed by a sharp retreat as investors reassess valuations amid broader tech stock weakness and concerns over AI spending and interest rates. Finance professor Jay Ritte's research indicates that many large IPOs underperform the market in their first year.
Rachel Winter, partner at Killik & Co, stated that SpaceX's volatility is not surprising, referencing Meta's post-IPO recovery. She highlighted the challenge of valuing SpaceX's brand amidst ambitious growth projections and investor enthusiasm. The company's inclusion in major index funds, such as Vanguard's Total Stock Market ETF and BlackRock's S&P Total US Stock Market ETF, has provided passive investors with exposure, but also spreads the risks associated with valuation, volatility, governance, and execution.