SpaceX’s market value has already evaporated by 1 trillion dollars

SpaceX shares keep falling, and since its IPO peak, the company has now wiped out more than $1 trillion in market value. The rocket and artificial intelligence giant founded by Elon Musk is facing its toughest valuation test since going public.

On Friday, SpaceX’s stock fell 5.4% to close at $123.99 per share, bringing its total market value down to $1.63 trillion. And on June 16—on the company’s third trading day after listing—the market value had once reached $2.64 trillion. The immediate trigger for this drop was that the company’s flagship rocket, Starship, was forced to abort a launch due to an engine failure.

The continued slide in the share price has dragged SpaceX below its IPO issue price of $135. Joe Gilbert, portfolio manager at Integrity Asset Management, said, “The timing of a launch failure is not ideal for the company’s narrative, but failure is an inherent risk in this narrative. Investors are reducing positions, reassessing valuations, and optimism is slowly fading, while also weighing down the previously elevated valuation multiples.”

Starship engine failure sparks selloff

On Thursday, SpaceX aborted a Starship launch attempt after part of the rocket’s engines failed to ignite. Musk then said on X that the company will replace two Raptor engines, and the next launch attempt may be delayed to early 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 the launch is successful next week, the interval between the two Starship flights would shrink from the prior 221 days to less than 60 days. Gesuale initiated coverage of SpaceX on July 7 with a “strong buy” rating, setting a target price of $800, the highest on Wall Street, about 545% above Friday’s closing price.

Gesuale also stressed that, “These kinds of anomalies will continue to accompany Starship’s aggressive R&D process—an inevitable cost of pushing ahead with breaking new ground in reusability, payload capability, and accelerating deployment for Starlink V3 and future NASA Artemis missions.”

Starship is a core pillar of SpaceX’s commercial blueprint

The strategic importance of Starship to SpaceX cannot be overstated. According to the IPO prospectus published by the company in June, SpaceX has invested more than $15 billion to date in Starship development. The rocket is the key vehicle for the company’s plans to build space data centers, expand its Starlink satellite communications network, and ultimately achieve crewed lunar landings and Mars missions.

Clear Street analyst Greg Pendy said, “Any meaningful slippage in progress will directly affect the scale expansion of both Starlink and direct-to-cell services, because lower launch costs are essential to accelerate satellite deployment.”

Royal Bank of Canada analysts Ken Herbert and Jonathan Atkin, meanwhile, believe that the cost savings enabled by Starship will be a key catalyst for unlocking SpaceX’s ambitions—including the so-called “orbital computing” business—but they also warned that a cadence of reusable launches is “critical.” The two analysts wrote in their report, “We understand that the path to de-risking is not linear, and we also think investors may be forced to accept this non-linear pace.”

Wall Street remains broadly bullish overall

Despite the recent selloff, Wall Street’s overall stance on SpaceX remains tilted to the upside. According to Bloomberg tracking, more than 80% of analysts rate the stock as buy or equivalent, with an average target price of $235.34, implying about 90% upside from current levels.

However, there are also structural pressures in the market. SpaceX added the Nasdaq 100 at the beginning of this month, and a lockup period on shares held by company insiders will expire in the coming months, after which shares will gradually be released into the market. Mark Malek, Chief Investment Officer at Siebert Financial, said, “Given that future lockups will be lifted one after another, many investors may have already reexamined the original logic behind their investments, and potential buyers who were previously on the sidelines are waiting for a lower entry point. As valuations gradually return to a reasonable range, the probability of this opportunity arising is quite high.”

As reported by The Wall Street Journal, SpaceX is in negotiations to sell computing capacity to the U.S. Department of Defense, and the news briefly boosted the stock price. The company has already signed similar agreements with Google, a subsidiary of Alphabet, and Anthropic PBC.

SpaceX’s continued slide in share price poses a potential threat to the current wave of AI-related IPOs. Artificial intelligence is a key component of SpaceX’s IPO narrative—one where the company positions space data centers as a strategic lever to capture a potential market of $2.65 trillion in value. This record-setting IPO brought substantial earnings to major Wall Street investment banks and pushed equity underwriting revenue to the highest quarterly level since 2021. Now, as SpaceX’s stock falls below its issue price, doubts are deepening about whether the market will sustain strong performance after listing for tech companies valued at such high levels.