SPCX (SpaceX) plunged suddenly on June 17, the day of the Federal Reserve’s policy decision. Four layers of logic resonated one after another. The Fed’s hawkishness is the core trigger—breakdown as follows:

## I. Core trigger: The Fed turns fully hawkish; the collapse of overvalued forward equity valuation models

1. **Valuation logic:** SPCX is priced almost entirely on forward cash flows over 5-10 years. Starship, space computing power, and the Mars plan are all forward-looking commitments to be realized later. In the DCF valuation formula, the discount rate equals the U.S. Treasury risk-free rate. When the Fed raises expectations for interest rates, delays rate cuts decisively, and pushes the probability of additional rate hikes within the year to the max, the discount rate rises directly. The future profits discounted back to the present are cut dramatically, so the “reasonable” market value is passively revised downward.

2. **Financing as a fatal blow:** The company continues to post large net losses (Q1 alone lost 4.2 billion). Its Starlink constellation networking, rocket iteration, and xAI computing power all depend on continually issuing debt and raising equity. In a high-interest-rate environment, the cost of issuing debt spikes. The pace of expansion is forced to slow down, and the market lowers its expectations for growth acceleration. Funds collectively flee the growth track; Nasdaq technology stocks get hammered across the board. SPCX can’t escape.

3. **Expectation reversal:** Early in the year, funds bet on rate cuts in the second half and on a liquidity-looseness “grouping” behind new stocks. The meeting directly removed the guidance on rate cuts. Funds switched in one click from loose growth trades to defensive value trades, and high-priced new shares were the first to be sold off.

## II. Reasons on the trading book: Short-term bubble + an extremely small float—one bit of selling pressure triggers a stampede

1. **Up more than 42% in 3 days:** It surged from the 135 offering price to around 210. Many IPO allotment buyers who took quick-profit positions already had gains of dozens of percentage points. They had long been willing to realize profits, and the hawkish news conveniently triggered concentrated selling by profit-takers.

2. **Float is only 4.2%:** There are very few tradable shares available in the market. When prices rise, a small amount of buy orders can blow up the stock price; when prices fall, a small amount of sell orders can’t get absorbed. During the session, the stock quickly drops from positive to sharply lower. The fragility of liquidity amplifies the decline—this is the direct technical reason behind the “sudden plunge.”

3. **Passive index buying gets exhausted in phases:** Early on, expectations of Nasdaq inclusion brought in more than 10 billion in passive funds. Once the window for funds to enter ends, there is a lack of steady “bottom support” buying.

## III. Hidden fundamental negatives—re-priced by capital during the sell-off

1. **Single profit structure:** Only Starlink is profitable. Rocket and AI businesses keep burning cash, and high interest rates will extend the payback cycle.

2. **Pressure from existing debt:** Nearly 30 billion in long-term debt. Part of the bridging loans must be repaid within half a year. As interest rates rise, the financial burden increases.

3. **Valuation overdrawn:** The price-to-sales ratio breaks 100x. It has already priced in growth for the next several years. Once negative news hits, the speed at which the valuation bubble gets squeezed and deflates is extremely fast.

## IV. Capital behavior: New-stock risk appetite retreats collectively

The massive IPO that just listed in itself has unstable supply. Institutional funds are originally just engaged in short-term narrative-based trading, not holding long-term core positions. After the Federal Reserve releases tightening signals, risk appetite shrinks rapidly. Institutions prioritize clearing positions with the highest uncertainty and the most inflated valuations among recent “new” stocks. SPCX becomes the first preferred target for reducing exposure.