SpaceX stock plunges 23% in three days as IPO rally fades

SpaceX shares fell 23% over three trading sessions through Monday, closing at $154.60 as the post-IPO rally reversed sharply. The stock dropped 16.4% on Monday alone, wiping out roughly $400 billion in market capitalization and pushing the company's valuation to about $2.18 trillion, down from a peak of $2.5 trillion set on June 16. The stock extended losses in premarket trading Tuesday, falling an additional 2% to around $151.

"The initial euphoria has worn off, and now the market is pricing in a higher-for-longer rate environment that punishes high-multiple growth stocks," said Mike O'Rourke, chief market strategist at Jones Trading.

The broader Nasdaq Composite fell 1.3% on Monday, while technology heavyweights including Alphabet, Amazon and Broadcom each lost more than 4%. The selloff coincided with a sharp rise in U.S. Treasury yields, with the two-year note reaching 4.23%, its highest level in more than a year, as traders priced in a potential rate hike as soon as September. New Federal Reserve Chair Kevin Warsh last week vowed to curb inflation triggered by the Iran war under President Donald Trump, with nine of 18 Fed officials now projecting higher rates by year-end. Higher yields on safe bonds reduce the appeal of high-valuation technology stocks like SpaceX, which trades at more than 100 times trailing earnings.

The selloff leaves SpaceX trading near its $150 IPO opening price, raising questions about whether the company — which combines Elon Musk's spacecraft, artificial intelligence and social media operations — can justify a valuation that briefly surpassed Amazon and Microsoft. A planned $20 billion bond offering, potentially launching this week, will test investor appetite for the company's debt.

AI Ambitions Face Profitability Hurdles

SpaceX's future market value rests largely on the assumption that its artificial intelligence arm, xAI, can capture a share of a $26.5 trillion total addressable market. But the division posted a $6.4 billion loss in 2025, and its Grok chatbot remains less popular than OpenAI's ChatGPT, Google's Gemini and Anthropic's Claude. The company on Monday announced a computing resources deal with startup Reflection AI at its Colossus 2 data center, following similar agreements with Anthropic in April and Alphabet in June.

Retail investors have remained net buyers of SpaceX every day since the stock listed, according to Vanda Research, suggesting individual traders see the pullback as a buying opportunity. KeyBank this week initiated coverage of the stock, describing the risk-reward as "balanced" given the current valuation. SpaceX disclosed $100.8 billion in cash and cash equivalents as of June 19, and announced a senior unsecured notes offering to refinance a $20 billion bridge loan taken out in March when Musk merged xAI and X into the spacecraft company.

This article is for informational purposes only and does not constitute investment advice.