SpaceX stock falls below IPO price and loses $1 trillion in market value

SpaceX Stock Falls Below IPO Price as Market Value Erases $1 Trillion

Shares of SpaceX (NASDAQ: SPCX) have dropped below their initial public offering price for the first time, following a volatile month that saw the company erase approximately $1 trillion to $1.2 trillion in market value from its June peak. The decline follows a historic public debut on June 12, 2026, which remains the largest IPO in history.

The stock first dipped below the $135 IPO price on Wednesday, hitting a record low of $132.15. While shares briefly rebounded to close that day at $135.27, the recovery did not hold. Shares closed Thursday at $131.11 and fell nearly 5% on Friday, trading below $125 in morning sessions.

This downturn follows a period of extreme volatility. After raising more than $85 billion during its June 12 debut, the stock climbed to an all-time high of $225.64 on June 16. At that peak, SpaceX briefly surpassed the market valuations of Amazon and Microsoft, and CEO Elon Musk became the world’s first trillionaire. However, the rally reversed sharply, including one session where the stock plummeted 16%.

Operational Setbacks and Financial Strain

Recent investor jitters were compounded by the cancellation of a Starship launch planned for Thursday at the Starbase facility in South Texas. The mission was intended to mark the vehicle's return to flight following a booster mishap in May involving the upgraded V3 vehicle.

"Some of the engines didn't start, triggering an automatic launch abort,"

Elon Musk, CEO, via X

Musk stated the company would attempt the launch again with a target of early next week. The Starship system is central to the company's future, as it is designed for next-generation Starlink satellite deployment and is under contract with NASA for the Artemis moon-landing program.

Financial reports highlight a stark divide between SpaceX's different business units. In 2025, the company generated $18.7 billion in revenue—a year-over-year increase of about 33%—but reported a net loss of $4.9 billion. Heavy spending on Starship development and AI infrastructure has weighed on profitability. In the first quarter of 2026, the company reported a net loss of $4.276 billion and spent $7.7 billion on AI capital expenditures.

The Connectivity unit, which manages Starlink, remains the primary profit driver. According to the IPO prospectus, Starlink generated $11.387 billion in revenue and $4.423 billion in operating income in 2025. However, its average revenue per user dropped from $99 a month in 2023 to $66 a month in the first quarter of 2026 as the company entered price-sensitive markets.

Market Skepticism and Debt Risks

The selloff has been fueled by concerns that the company's valuation is driven more by narrative than fundamentals. NYU Stern professor Aswath Damodaran described the IPO prospectus's total addressable market estimate as a hallucination and suggested the valuation was 27% too high. Paul Krugman likened the company to a Ponzi scheme, while Jeremy Grantham of GMO called the offering possibly the craziest IPO in human history.

Further instability arose from post-IPO financial moves, including a $60 billion acquisition and a $25 billion bond sale. The latter has traded at levels indicative of junk bonds, suggesting sophisticated investors see a more difficult path to success than Musk has presented.

Despite the crash, some Wall Street analysts remain bullish. Raymond James envisions a total addressable market of $30 trillion and suggests shares could soar 433%. An average 12-month price target from 27 analysts sits at $245.96. Conversely, CFRA’s price target implies a further 23% drop due to risks surrounding xAI, the former Twitter (X), and space-based AI data centers.

Looking Ahead: Lockups and Earnings

Additional selling pressure is expected in the coming months. Rank-and-file employees and early investors are eligible to sell 911.5 million shares shortly after the first quarterly report, which is expected in August. Some reports indicate that up to 44% of shares could be dumped by insiders in September.

The company's next major milestones include the rescheduled Starship Flight 13, which aims to deploy advanced Starlink V3 satellites and conduct reusability tests. Investors are also awaiting the first post-listing financial results, which SpaceX has stated it will release exclusively via its website and X account rather than through wire services.