Less than two weeks after its highly anticipated initial public offering (IPO), SpaceX's shares are under pressure, with a three-day sell-off wiping out over $600 billion from its market value. Despite this significant drop, the company's shares are still up roughly 10% from its initial public offering price of $135. Analysts like Pierre Ferragu of New Street Research suggest that a cautious approach to AI investments could be contributing to the stock's performance.
Adding to the financial complexity, SpaceX is in the process of issuing billions in investment-grade debt. On Tuesday, June 23rd, the company sold $25 billion of investment-grade bonds. This bond offering is intended to replace expensive debt that helped fund Elon Musk's 2022 acquisition of X (formerly Twitter) and supported the AI lab xAI, which has been experiencing rapid cash drain. The company is actively working to reduce its annual interest burden despite taking on additional debt.
Bloomberg's Ed Ludlow reported on June 23rd that SpaceX was wavering near a $2 trillion market cap following the three-day rout. Investors are questioning the remaining upside of the company, especially as the AI trade stalls and other major offerings from companies like OpenAI and Anthropic are anticipated. Charlie Wells of Bloomberg also highlighted these pressures on "The Pulse with Francine Lacqua."
Despite the recent downturn, market sentiment prior to the IPO, as noted by Evercore ISI’s Julian Emanuel, indicated that investors were exhibiting a "fear of missing out" (FOMO) mentality, leading them to buy the dip even amidst geopolitical events like a second day of strikes in the Iran war. This FOMO was a key factor driving investor behavior leading up to and immediately following SpaceX's trading debut. The company's debut bond offering saw strong demand, attracting $89 billion from investors, according to Bloomberg reports.
