When SpaceX went public just under two weeks ago the excitement was too much for mum and dad investors around the world who scrambled to buy a tiny slice of Elon Musk’s bold vision to dominate space.
They invested a total of $579 million in the first week of trading and it was happy days for many of them as the share price shot up almost 50 per cent.
Fast forward to today and only those who got in on the very first day will be seeing green on their portfolios, as its share price has plummeted more than 29 per cent from its peak.
That’s a loss of about $1 trillion in the company’s market value and an unwanted Wall Street record as the first publicly listed company to lose $1 trillion in market capitalisation.
Mr Musk’s net worth meanwhile has taken a $500 billion hit from the sell-off.
Overnight the space exploration and AI goliath suffered its biggest single day drop so far, falling 16.4 per cent.
The shares were first priced at $135 before trading began. A buying bonanza then ensued, sending its market cap above Amazon and, for a short time on Tuesday, above Microsoft too. It is now trading at $154.
Amid fears of a wider AI bubble, the sell-off also came with ominous financial details.
On Monday, SpaceX said it had $144 billion in cash and cash equivalents as of June 19. The company lost $7 billion in 2025 and posted another $6 billion net loss in the first quarter of this year.
The fall came as the rocket and satellite company disclosed plans for an “inaugural” bond offering of unspecified quantity. This is financial speak for a giant corporate “IOU.”
It’s the very first time SpaceX is asking major institutions to lend them cash in exchange for regular interest payments, rather than just selling chunks of the company. Because the amount is unspecified it has added to the uncertainty surrounding SpaceX.
Investment guru Benjamin Graham, whose seminal book The Intelligent Investor has become a bible for those trading stocks, warned against retail investors buying into IPOs. He said they were often overhyped and only benefited those who were invested before the IPO.
However, the share price is still sitting above what it was when the company went public and many investors may be waiting for the share price to drop further before buying back in.
According to the AFR’s Chanticleer column, there was a bigger story at play about the wider stock market; that the tech boom that has driven markets for almost four years may be starting to shift.
“The ETF that tracks the magnificent seven tech stocks – Apple, Amazon, Alphabet, Meta Platforms, Microsoft, Nvidia and Tesla – surged almost 30 per cent from the end of March, as investors bet on peace in Iran and the AI trade swept all before it,” it reported.
“But the magnificent seven are down almost 10 per cent since late May, and are now down 2 per cent since the start of the calendar year, compared to a 9 per cent gain for the S&P 500.
“If that performance continues, we could be looking at only the second time in the past decade that the magnificent seven has underperformed the broader market.”
These fears may be driven by concerns that the AI giants, like Anthropic and OpenAI that are also looking to list on the stock market, are seeking increasing amounts of money while it remains unclear how their business models will generate profits to justify the expenditure.
Adding to those concerns are the fact that the war in the Middle East is driving up inflation around the world.
That includes the US where the latest data shows inflation is on the rise. The Bank of America predicts there will be three rate hikes by the end of the year. At the start of the year, it was widely predicted there would be two interest rate cuts.
All this means that the money the AI giants need to fund their expansions will be more expensive and difficult to raise.
Tony Sycamore at IG said this was making investors think twice before piling more money into the sector. He said the SpaceX sell-off has wiped approximately $1 trillion in market value from the company — an unprecedented swing for any single stock.
“SpaceX was never going to be a stock for the faint-hearted. At its core, investors are paying a massive premium for Elon Musk’s multi-decade vision, effectively looking past a staggering valuation disconnect,” he said. “Trading at a reported 90-110x forward revenues, SpaceX’s valuation dwarfs even Tesla’s lofty multiple of roughly 16x, raising serious questions about the stock’s ability to defend its $135 IPO price over the longer term.
“To hold these levels, the company must maintain a flawless execution streak across its launch cadence, Starlink subscriber growth, and critical Starship technical milestones.
“Looking ahead, there should be some technical support from index inclusions. SpaceX is expected to join the Nasdaq-100 in early July, with other major indices likely to follow. These additions will bring meaningful passive inflows from ETFs and index funds — a form of ‘forced buying’ that could provide a floor if sentiment continues to cool.
“Ultimately, as SpaceX — the poster child for the ‘New Frontier’ of tech — settles into the public markets, the coming months will be a fascinating test of whether index-driven demand can withstand the gravity of executing in one of the world’s most challenging industries.”
Wall Street sell-off as tech stocks drop
SpaceX wasn’t the only victim in trading overnight as a tech-led sell-off took place on Wall Street, while crude largely lost ground on the back of positive US-Iran talks.
While Washington and Tehran flagged progress at peace negotiations in Switzerland, traders are struggling to build on last week’s rally sparked by news of a deal to end the Middle East conflict.
Tech firms — the main driver of a surge across world markets as investors pile into all things AI — took a hit in Asia.
South Korean chip giants SK hynix and Samsung tumbled to drag the Kospi index down more than three per cent, though it is still up more than 100 per cent since the turn of the year.
Tokyo was also in the red, with tech investment titan SoftBank shedding more than seven per cent and chipmaker Tokyo Electrondown.
Taipei and Shanghai were down, with Hong Kong and Sydney flat. Singapore, Wellington and Manila edged up.
The tepid performance followed a sharp drop on Wall Street, where the Nasdaq sank more than one per cent as market giants Amazon, Nvidia and Microsoft were sharply down.
The SpaceX drop arrives on the heels of a large equity round announced earlier this month by Google parent Alphabet and a data centre venture between Microsoft and Chevron, developments which underscore the hefty capital toll of the artificial intelligence drive.
Traders are also fretting over the extended valuations of some firms, with Nvidia topping $5 trillion.
Oil prices edged up, though they remain below $80 following Monday’s drop that came after the US Treasury said it was temporarily lifting sanctions on Iran to allow it to produce, sell and deliver crude oil and related products through August 21.
Maritime trackers also pointed to an uptick in tanker traffic through the Strait of Hormuz.
US Vice President JD Vance said a “very good foundation” had been laid for negotiations towards a final deal and that Iran would allow UN nuclear inspectors to return to the country.
Iranian Foreign Ministry spokesman Esmaeil Baqaei said for his part that “a very brief discussion took place regarding the nuclear issue, but there was no discussion of details”.
US President Donald Trump said the strait, the critical channel for much of the world’s oil, is now “totally open” to shipping after Iran closed it in response to US and Israeli forces bombing the country late February.
“We’re negotiating — we’ll see how that all goes — but we have two things,” Mr Trump said. “We have an open strait and we have a country that will never have a nuclear weapon.”
Here in Australia the market seems flat as investors digest what’s happening around the world. It is 0.085 per cent down at the time of writing.
SpaceX signs $1.8 billion deal
Amid the sell-off, SpaceX revealed on Monday it had signed a multi-year contract with young artificial intelligence start-up Reflection AI, which will pay around $1.8 billion annually to access the rocket company’s AI data centres.
The agreement follows earlier deals with Anthropic and Google, signed in early May and early June, respectively. It further confirms the evolution of SpaceX’s business model, which is positioning itself as a provider of AI computing power.
Under the new contract, Reflection AI will gain access to capacity at the Colossus 2 data centre, located in Memphis on the border between Tennessee and Mississippi, starting on July 1.
Once operations reach full scale, Reflection will pay SpaceXAI — SpaceX’s AI subsidiary — $150 million per month through late 2029.
Either party can terminate the agreement with 90 days’ notice. Notably, SpaceX will provide Reflection AI with access to Nvidia’s GB300 processors, among the most powerful on the market.
After rapidly building data centres that were intended for its own operations and AI development, SpaceX has changed course and is now sharing its facilities with other companies.
Based in New York, Reflection AI was founded in 2024 by two former Google DeepMind researchers, Misha Laskin and Ioannis Antonoglou.
The start-up is developing an advanced AI model that will be more open, meaning it can be downloaded and modified, unlike so-called closed models such as OpenAI’s ChatGPT.
— with AFP
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