Key Points
Space Exploration Technologies (NASDAQ: SPCX), better known as SpaceX, hasn’t exactly been a great performer on the public markets, losing more than $1 trillion in market value since its June peak. It went public at $135 per share, but quickly soared to a peak of $225.64 just days later. As of this writing, the stock trades for less than $110.
Despite the slump in the stock price, there isn’t much that has gone wrong with the actual business. Here’s a quick overview of what has changed for better or worse since SpaceX went public, and what to watch going forward.
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What is behind SpaceX’s trillion-dollar plunge?
First, the trillion-dollar figure refers to the difference between SpaceX’s current market cap and its peak shortly after its initial public offering. Compared with the IPO price, which valued the company at more than $1.7 trillion, SpaceX is down by less than 20%.
Image source: The Motley Fool.
Even so, a nearly 20% decline in less than two months raises the question of what went wrong.
The short answer is “not much.” The flagship rocket program, Starship, temporarily delayed its launch, which may have spooked investors. But that’s par for the course when it comes to space companies, and the launch successfully took place on July 24.
There’s also anticipation that insiders may begin cashing out as lockup periods expire. SpaceX is using a non-traditional lockup expiration schedule, with a significant amount of stock set to become available for trading after it reports second-quarter earnings on Aug. 4.
More good than bad
It’s worth pointing out that since SpaceX went public, the news has generally been positive for the business and for overall sentiment. Just to name some of the key developments:
- While the compute deals with Anthropic and Alphabet came before the IPO, SpaceX added a deal with Reflection AI in the weeks that followed, and further potential deals are reportedly in the works.
- As mentioned, the Starship launch took place on July 24 and was a success, with the softest-ever splashdown.
- Most analysts who have initiated coverage on SpaceX have been bullish, with a median analyst price target of about $242 (more than double the current price).
In a nutshell, although the numbers are admittedly huge, the percentage move hasn’t been too unusual. Several other recent IPOs that received a lot of attention (such as Figma (NYSE: FIG)) cooled off even more in the weeks after going public. With SpaceX set to report earnings for the first time as a public company on Aug. 4, investors will get a glimpse of how the business is actually performing and a clearer picture of whether the current valuation is cheap or expensive.
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Matt Frankel, CFP® has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
