SPCX (SpaceX) plunged sharply on June 17, the day of the Federal Reserve’s rate decision. Four layers of logic resonated together— the hawkish stance of the Federal Reserve is the core fuse. The breakdown is as follows:

## I. Core Fuse: The Fed turns fully hawkish, breaking the overvalued forward equity valuation model

1. **Valuation logic:** SPCX is priced almost entirely on **5–10 years of forward cash flows**. Starship, space computing power, and the Mars plan are all future realizations. In the DCF valuation formula, the **discount rate = U.S. Treasury risk-free rate**. When the Federal Reserve raises expectations for interest rates, delays rate cuts completely, and pushes the probability of additional rate hikes to the max within the year, the **discount rate rises directly**. Future profits discounted back to the present shrink dramatically, forcing a **passive downward revision** of the reasonable market value.

2. **Financing as the fatal blow:** The company keeps posting large net losses (Q1 alone lost **4.2 billion**). The Starlink network rollout, rocket iterations, and xAI computing power all rely on constantly issuing debt and raising equity. In a high interest rate environment, the cost of issuing debt soars, forcing the pace of expansion to slow. The market lowers its expectations for growth acceleration; money collectively exits the growth track. Nasdaq technology stocks are hit across the board—SPCX has no way to escape.

3. **Expectation reversal:** At the start of the year, funds bet on interest rate cuts in the second half and on liquidity easing to rally new stocks. At the meeting, the rate-cut guidance was deleted directly. Funds instantly shifted from “easy liquidity/growth” trades to “defensive value” trades. High-flying new shares were the first to be dumped.

## II. Factors within the trading order book: short-term bubble + extremely small float— a little selling pressure triggers a stampede

1. **Cumulative surge over 3 days exceeded 42%:** from the issuance price of **135** to around **210**. A large number of IPO short-term trading accounts were sitting on floating profits of dozens of percentage points and already had intentions to take profits. The hawkish news just happened to trigger concentrated profit-taking and selling.

2. **Float is only 4.2%:** there are very few tradable shares in the market. When prices rise, small buy orders can blow up the stock price; when prices fall, small sell orders can’t be absorbed. During trading, it quickly jumps from green-to-red, and the fragility of liquidity amplifies the decline. This is the direct technical reason for the “sudden drop.”

3. **Passive index buying becomes exhausted in stages:** Earlier, expectations from inclusion in the Nasdaq brought in **hundreds of millions** of passive capital. Once the window for funds to enter ended, there were no stable backstop bids.

## III. Hidden negative fundamentals; during the selloff, capital reprices them

1. **Single profit structure:** Only Starlink is profitable. Rocket and AI businesses continue to burn cash, and high interest rates will lengthen the payback period.

2. **Pressure from existing debt:** nearly **$30 billion** in long-term debt. Some bridge loans must be repaid within **half a year**. Rising interest rates worsen the financial burden.

3. **Valuation is already overdrawn:** the price-to-sales ratio breaks **100x**. Growth expectations for the coming years have already been priced in. When bad news hits, the bubble in valuation deflates extremely quickly.

## IV. Capital behavior: collective withdrawal of risk appetite for new stocks

The giant IPO that has just listed in itself has unstable “chips.” Institutional funds originally came in to play short-term trading narratives, not long-term core positions. After the Federal Reserve releases tightening signals, risk appetite contracts quickly. Institutions first clean out the most uncertain and most overvalued recent IPOs—and SPCX becomes a first-choice target for trimming positions.