SpaceX evaporates $400 billion in market value in a single day—are high interest rates beginning to kill valuations?

Author: Wu Yu, Jinshi Data

SpaceX, an aerospace + AI giant under Elon Musk (SPCX), saw an epic plunge in its stock price on Monday, ending the short-term, one-way uptrend after listing. Its market value evaporated by $400 billion in a single day, and the magnitude of the move set a record high for the stock since it began trading.

On Monday’s close, SpaceX sank 16.4% to $154.60, falling below its first-day closing price of $160.95. The company completed an $86 billion IPO on June 12, the largest in history, at an offering price of $135.

The Financial Times of the United Kingdom, based on data calculated from the Bloomberg Terminal, said that this $400 billion single-day market cap decline is the second-largest single-day loss in the history of publicly listed companies worldwide. At Monday’s close, the company’s total market value was $2.03 trillion, a sharp drop compared with its nearly $3 trillion intraday peak on June 16.

Jones Trading Company analyst Mike O’Rourke commented on the market, saying: “The optimistic funds that were expected at the beginning of the IPO have already finished getting in. Market buying has basically dried up, and the upward momentum has completely run out.”

As the broader U.S. stock market weakened in tandem on Monday, the Nasdaq Composite Index (IXIC) fell 1.3% on Monday. Big tech stocks such as Google (GOOGL), Amazon (AMZN), and Broadcom (AVGO all dropped by more than 4%, putting collective pressure on the overvalued growth sector.

Hawkish Fed expectations lift U.S. Treasury yields—valuation logic for high-valuation targets is dealt a severe blow

The core trigger for the collective sell-off in technology stocks this round is that expectations for Federal Reserve policy have shifted across the board. Last week, the new chair, Wosh, made it clear that the Fed will suppress upward inflation pressures brought about by the U.S.-Iran war. At the same time, the Fed officials’ dot plot released tightening signals that came in beyond expectations: among the 18 officials who submitted rate forecasts, 9 expect rate hikes to take effect by the end of 2026, while no one predicted rate hikes at the March meeting.

Data from federal funds futures trading on Monday showed that the market has fully priced in a rate hike as early as September, by 25 basis points. The 2-year U.S. Treasury yield—highly sensitive to monetary policy—rose 5 basis points in a single day, closing at 4.23%, the highest level in over a year.

Rising U.S. bond yields directly suppress high-valuation growth stocks. SpaceX’s current price-to-sales ratio is over 100. Its valuation is supported by a forward-looking AI growth narrative. After the yields on risk-free bonds increased, funds pulled back sharply from high-premium tech assets.

Pressure on the financing side also intensifies at the same time. SpaceX plans to issue up to $20 billion in bonds this week to repay the $20 billion bridge loan from March. Previously, Musk folded the heavily indebted AI company xAI and the social platform X into SpaceX. Coupled with ongoing, large-scale spending on AI, the company’s need to raise debt is urgent; in a rising-rate environment, the cost of issuing bonds increases significantly.

The core logic supporting SpaceX’s trillion-dollar valuation comes from expectations for its AI business. The company estimates that the overall potential market size for its AI tracks is $26.5 trillion, but in 2025, losses for xAI-related AI business are as high as $6.4 billion, meaning profits cannot be realized in the near term.

In addition, the market buzz around the large model Grok under xAI is weaker than OpenAI’s ChatGPT, Google’s Gemini, and Anthropic’s Claude, leaving questions about its product competitiveness.

Although the competitiveness of AI large models is somewhat weak, SpaceX is pushing into the compute power leasing track. Relying on its self-built “Colossus 2” supercomputing data center to rent out compute power, it is moving into the AI infrastructure dividend.

On Monday, the company announced that it will provide compute resources to the AI startup Reflection AI. This is another compute-power cooperation after it connected with Anthropic in May and partnered with Alphabet, the parent company of Google, in early June.

The business aims to benchmark CoreWeave’s commercial model. It rents out GPU compute power to all kinds of AI R&D enterprises, attempting to stabilize cash flow through compute services to offset ongoing losses from large-model development, but in the short term it is difficult to reverse market concerns that the company is overvalued.

According to the Wall Street Journal, the agreement will generate $150 million in monthly revenue for SpaceX from July 1, 2026 to 2029. Like other AI compute-power collaborations with SpaceX, this agreement may be terminated 90 days early after the first three months. If the agreement is executed through its full term, Reflection’s total payment to SpaceX will reach about $6.3 billion.