SpaceX Stock Slides After IPO Surge as Profit-Taking Accelerates

Key Insights

• SpaceX stock has lost momentum after a powerful post-IPO rally.
• Investors appear to be locking in profits following the stock’s rapid advance.
• Historical IPO trends suggest further volatility before a longer-term recovery.

SpaceX stock has retreated sharply this week, wiping hundreds of billions of dollars from its market value. The company’s valuation has fallen from more than $3 trillion shortly after its public debut to approximately $2.3 trillion.

The decline has raised questions about whether the sell-off marks the beginning of a broader downturn or simply reflects normal post-IPO profit-taking.

SpaceX Stock Gives Back Early IPO Gains

The SPCX stock price had the best Initial Public Offering (IPO) on record, raising over $75 billion in cash at a $1.7 trillion in valuation. Its stock jumped by 19% on the first day and then continued when the markets opened on Monday.

It then soared to a high of $225.50, with its valuation passing that of Amazon and Microsoft. This surge happened as the post IPO hype gained steam, with retail and institutional investors continuing their purchasing.

This trend, however, stalled on Wednesday when the company announced its $60 billion acquisition of Cursor, a top player in the artificial intelligence industry. The deal will be funded using some of the cash it raised during its IPO and its stock, a move that will dilute some of the shareholders.

The ongoing retreat is in line with what some analysts were predicting before the IPO last week. At the time, there were concerns that the stock would jump and then retreat, as many IPOs have done in the past.

A good example of this is Meta Platforms, which doubled within the first few days of the IPO and then retreated below the IPO price after that. Indeed, this performance aligns with how other popular newly listed companies have done after their listings. Some of the popular names in this are Circle Internet, Figma, and Gemini Space Station.

The Bearish Case for SpaceX Shares

There are a few fundamental reasons why the SPCX stock may continue falling in the near term. First, the company’s growth, based on its last S1 statement, was not all that strong. Its annual revenue jumped to $18 billion last year from $14 billion a year earlier. While a $4 billion expansion is a good number, it does not justify a price-to-sales ratio of 166.

Second, in line with the first statement, the company is highly overvalued considering that it is losing billions of dollars a year. Its annual loss in 2025 jumped to over $4 billion. Because of its xAI business, these losses will likely remain for a while.

Third, SpaceX is still facing some major competition across its businesses. Blue Origin and Rocket Lab are challenging their launch business, while Grok is facing strong competition from ChatGPT and Claude.

Additionally, it expects to continue its spending plans for a while, a move that will dilute its shareholders. For example, together with Tesla, they are building a $100 billion Terafab chip plant in Texas.

The Bullish Case for the SPCX Stock

On the other hand, there is a bullish case for the SpaceX stock. The most notable is that it will soon be added to major indices by companies like FTSE Russel and MSCI, a move that will force ETF issuers to buy it.

Also, this buying will happen at a time when the issued shares are a tiny part. SpaceX offered just a 5% stake in its IPO, which may lead to more demand than supply.

Additionally, the company has a large market share in industries with a large total addressable market (TAM). Estimates are that all its businesses have a TAM of over $22 trillion.

So, what’s next for the SPCX stock? Based on the historical performance of most IPOs, chances are that the stock will remain under pressure for a while. It will then bounce back and start a major bull run over time. This is what happened with top companies like Meta, Google, and Tesla.

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