SpaceX’s share price falls below its issue price, with its market value erasing more than $1 trillion

By: Zhao Ying

SpaceX’s stock price has continued to fall. Since its IPO peak, the company has seen its market value evaporate by more than one trillion USD. The rocket and artificial intelligence giant founded by Elon Musk is now facing the most severe valuation test since going public.

On Friday, SpaceX’s share price fell 5.4%, closing at $123.99 per share. Its market capitalization dropped to $1.63 trillion. But on June 16—on the company’s third trading day after listing—the market cap had briefly reached $2.64 trillion. The immediate trigger for this decline was that the company’s flagship rocket, Starship, was forced to abort a launch task due to an engine malfunction.

The ongoing slide in the share price has pushed SpaceX below its IPO offering price of $135. Joe Gilbert, portfolio manager at Integrity Asset Management, said, "The timing of a failed launch is not ideal for the company’s narrative, but failure is an inherent risk in that narrative. Investors are reducing positions, re-examining valuation, and optimism is slowly fading, while also weighing down valuation multiples that had previously run high."

Starship engine malfunction triggers selling

On Thursday, SpaceX aborted its launch after a portion of the Starship rocket’s engines failed to ignite. Musk then said on the X platform that the company will replace two Raptor engines, and the next launch attempt may be delayed to the start of next week.

SpaceX said it will try to launch again. In a report sent to clients on Friday, Raymond James analyst Brian Gesuale noted that even if there is a delay, if a successful launch occurs next week, the interval between the two Starship flights will shrink from the previous 221 days to less than 60 days. Gesuale initiated coverage of SpaceX on July 7 with a “Strong Buy” rating and a target price of $800, the highest on Wall Street, about 545% above Friday’s closing price.

Gesuale also stressed that, "Such abnormal situations will continue to accompany Starship’s aggressive R&D process—an inevitable cost of pushing breakthroughs in reusability, payload capability, and accelerating preparations for Starlink V3 deployment and future NASA Artemis missions."

Starship is the core pillar of SpaceX’s commercial layout

Starship’s strategic significance for SpaceX cannot be underestimated. According to the company’s IPO prospectus released in June, SpaceX has already invested more than $15 billion in Starship development. The rocket is the core vehicle for the company’s plans to build space data centers, expand the Starlink satellite communications network, and ultimately achieve crewed lunar landings and Mars missions.

Clear Street analyst Greg Pendy said, “Any material setback in progress will directly affect the scaling expansion of Starlink and direct-to-cell services, because lower launch costs are crucial to accelerating satellite deployment.”

Royal Bank of Canada analysts Ken Herbert and Jonathan Atkin, meanwhile, believe that the cost savings brought by Starship will be a key catalyst for unlocking SpaceX’s ambitions—including the so-called “orbital computing” business—but they also warned that the launch cadence of reusability is “crucial.” In their report, the two analysts wrote, “We understand that the path to de-risking is non-linear, and we also think investors may be forced to accept this non-linear cadence.”

Wall Street overall still maintains a bullish stance

Despite the recent selloff, Wall Street’s overall view of SpaceX remains tilted toward bullish. According to Bloomberg tracking, more than 80% of analysts rate the stock as buy or equivalent. The average target price is $235.34, implying roughly 90% upside from current levels.

However, the market also faces structural pressures. SpaceX added the Nasdaq 100 index earlier this month, and the lock-up period for shares held by company insiders will expire in the coming months, at which point shares will gradually be released into the market. Siebert Financial Chief Investment Officer Mark Malek said, “Given that future lock-up periods will be lifted one after another, many investors may have already revisited the original investment logic, while potential buyers who had been waiting may be waiting for a lower entry point. As valuations gradually return to a reasonable range, the likelihood of such an opportunity arising is quite high.”

The Wall Street Journal reported that SpaceX is in talks to sell computing power to the U.S. Department of Defense. The news sparked a brief rebound in the stock price. The company has already signed similar agreements with Alphabet’s Google and Anthropic PBC.

SpaceX’s continued stock decline poses a potential threat to the current IPO boom tied to artificial intelligence. Artificial intelligence is an important component of the core narrative for SpaceX’s IPO—SpaceX positions space data centers as a strategic foothold to capture a potential market of about $2.65 trillion. This record-breaking IPO had generated rich returns for major Wall Street investment banks, driving equity underwriting revenue to the highest level in a quarter since 2021. Now, as SpaceX’s stock price falls below the offering price, doubts are deepening about whether the strong performance of highly valued tech companies can be sustained after listing.