SpaceX has erased more than $1 trillion in market capitalization in barely a month, a wipeout that turns the year’s most hyped initial public offering into a case study in what happens when a story stock meets a hardware reality. The rocket and AI company peaked at $2.7 trillion on June 16, just days after a $135-per-share debut that briefly made it the fourth-largest public company on the planet. By Friday afternoon it traded at $125, down 43% from its $225 high and below its listing price for the first time since July 15.
The IPO frenzy was always built on a sliver of float. Fewer than 5% of shares are publicly available, with the remaining 95% locked up under staggered agreements that bar employees and early investors from selling. That scarcity amplified every bid on the way up; it is now amplifying every offer on the way down. Short-sellers have taken notice, borrowing roughly one-third of the available shares to bet against the company, according to CNBC.
The catalyst for the latest leg down was unmistakably physical. On July 16 SpaceX scrubbed the 13th test flight of Starship, the 400-foot reusable rocket that is supposed to slash the cost of reaching orbit, citing an engine ignition failure. The vehicle is the centerpiece of Elon Musk’s plan to make space travel routine; each delay calls the timeline, and the valuation, into question. Shares fell 6% in Friday morning trading after the abort.
Musk, who also owns the social media platform X, posted that the next attempt could come in a few days, with “early next week” the next available window. That is the rhythm of rocket development, test, fail, fix, repeat, but public markets are not accustomed to pricing engineering cycles in real time. The lockup expirations still ahead will only increase the supply of shares hitting the market, giving early holders their first chance to monetize paper gains that have now evaporated by nearly half.
What matters now is whether Starship flies before the next lockup tranche unlocks. If the vehicle reaches orbit and demonstrates the reusability that underpins the entire investment thesis, the current price may look like an entry point. If the test campaign stumbles again, the short position, already large for a float this thin, could become a self-fulfilling squeeze in reverse. The market has priced perfection; the hardware has not yet delivered it.