SpaceX shares tumbled as much as 6.9 percent to $122.12 on Friday, leaving the rocket and artificial intelligence company with a market value of $1.61 trillion, down more than $1 trillion from the $2.64 trillion peak reached on June 16, its third day of trading. The stock now sits below the $135 initial public offering price, a rare and immediate rebuke for the largest IPO in history.
The offering had raised expectations that SpaceX could capture a dominant share of an estimated $26.5 trillion total addressable market built around orbital data centers and a next-generation Starlink network. Instead, the shares have given back every bit of their post-IPO pop and then some, dragging the valuation back toward earth before the company has demonstrated that its Starship vehicle can fly on anything resembling a schedule.
Friday’s decline followed an aborted Starship launch on Thursday caused by an engine issue. Elon Musk said on X that two Raptor engines would be swapped, likely pushing the next attempt to early next week. “The failed launch’s timing is suboptimal to the story, but failed launches are always a risk to the story,” said Joe Gilbert, portfolio manager at Integrity Asset Management. He added that investors are de-risking positions and rethinking valuations as optimism erodes from the space sector and depresses lofty multiples simultaneously.
Raymond James analyst Brian Gesuale framed the anomaly as inherent to an aggressive development program pushing the boundaries of reusability, payload capacity and rapid cadence for Starlink V3 deployment and future NASA Artemis missions. Even with the delay, a launch next week would cut the gap between Starship flights to less than 60 days from 221 days previously. Royal Bank of Canada analysts Ken Herbert and Jonathan Atkin noted that cost savings from Starship could unlock orbital compute ambitions, though they cautioned that a reusable launch cadence is “imperative” and that the path to de-risking is non-linear, a cadence investors may be forced to embrace as well.
Structural overhangs are compounding the technical uncertainty. An extended lock-up on insiders will release shares periodically into the market over the coming months. “If we factor in the lock-ups expiring in the future, many investors have probably re-thought their initial theses, and prospective ones who have been watching from the sidelines are waiting for lower entry points, which have a good chance of emerging as its valuation gets rightsized,” said Mark Malek, chief investment officer at Siebert Financial. The average 12-month price target sits at $235.34, nearly double Friday’s price, but targets are not bids.
The slump threatens the broader boom in artificial intelligence-linked offerings that Wall Street has been riding. SpaceX’s record deal helped investment banks haul in the most equity-advisory revenue in the second quarter since 2021. If the poster child for space-based AI infrastructure cannot hold its IPO price, the pipeline of copycat deals may find the market considerably less accommodating.