Why SpaceX (SPCX) Stock Is Sinking Below IPO Price

SpaceX (SPCX) stock is under pressure this month and fell 14.7% last week.  

The stock settled near $124 on Friday, and it is below its Initial Public Offering (IPO) price of $135. SpaceX made history on June 12th with the largest IPO ever, debuting at a valuation near $1.75 Trillion. According to its roadshow deck, SpaceX’s mission is to "build the systems and technologies necessary to make life multiplanetary, to understand the true nature of the universe, and to extend the light of consciousness to the stars.” At the same time, it says with this “fundamental mission ... progress in accessing space continues to yield opportunities that enrich life on Earth.” While best known for its aerospace and rocket launch segments, the company operates across three primary verticals: Space Launch, Starlink Connectivity, and Artificial Intelligence infrastructure. But the stock volatility post IPO reflects a growing debate on Wall Street. 

Is SpaceX the next trillion-dollar growth story, or has investor enthusiasm gotten too far ahead of fundamentals?

Let’s break down SpaceX and how it makes money amid its fall from the hype.  

• Starlink is SpaceX's primary revenue driver and its only consistently profitable segment. Generating the bulk of the company's income, Starlink provides high-speed, low-latency satellite internet to over 10 million subscribers across more than 160 countries. Through over 9,600 low-earth-orbit satellites, SpaceX provides broadband internet service to consumers, businesses, and governments worldwide. This segment delivers recurring subscription revenue. 
• Space Launch is the core aerospace foundation of the company. SpaceX generates revenue through commercial satellite launches, government contracts, and manned spaceflights. It has a 95%-plus launch success rate, but this segment has faced challenges due to the high cost of development. The company scrubbed a launch last Thursday after some engines didn't start, triggering an automatic launch abort. The launch is now scheduled for Thursday. Major customers include the National Aeronautics and Space Administration (NASA), the U.S. Space Force, and the National Reconnaissance Office using its Falcon 9, Falcon Heavy, Dragon, and Starship platforms. 
• Artificial Intelligence: The newest and most scrutinized growth driver is SpaceX's AI business. Following the integration of Elon Musk's AI assets, including XAI, the company now includes Grok, AI infrastructure, data centers, and enterprise AI offerings. SpaceX is leveraging its massive network to build out vast data center capacities and AI compute services. The AI exposure is one reason investors initially awarded the stock such an aggressive valuation following the IPO although it may also be the fact that Elon Musk heads the company. Although this segment uses a lot of the CapEx spend, it may also provide the most revenue in the future. 

Even with the 45% fall from its post IPO intraday high of $225.64, SpaceX’s market cap is still over $1.6 trillion. Looking ahead, several catalysts could determine where SpaceX trades over the next year: Starlink growth rates and profitability, execution of the Starship program, and its potential for expanded revenue generation. In addition, AI infrastructure monetization is a key area for potential future growth. Its upcoming first post-IPO earnings report and guidance may also be a major catalyst.  

However, the August IPO lockup expiration could create additional selling pressure. S3 Partners last week said that short sellers increased their bearishness in SpaceX stock and hold 29% of publicly traded shares as a short.  

The stock has quickly evolved into a sentiment gauge for both the AI trade and speculative investing. The company is not profitable and only generated trailing revenue of about $20 billion. The challenge for investors is valuation. Some market analysts note that SpaceX is trading at an extremely high revenue multiple for a company that remains unprofitable. If Starlink adoption and AI revenues accelerate, bulls may argue the recent pullback is an opportunity. If growth disappoints and guidance is subdued, bears may continue to point to valuation as the primary risk.

This material is intended for informational purposes only and should not be considered a personalized recommendation or investment advice. Investors should review investment strategies for their own particular situations before making any decisions.

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