SpaceX Has Lost Over $1 Trillion in Market Value Since Peak Prices

SpaceX has lost over $1 trillion in market value compared to its historical peak for this rocket and artificial intelligence giant.

According to Mihan Blockchain, the company's stock fell by 5.4% on Friday to $123.99 per share, reducing its market value to $1.63 trillion. The company's value stood at $2.64 trillion at the end of trading on June 16 (on its third day of trading on the stock exchange).

The company, officially known as Space Exploration Technologies, initially experienced growth after registering the largest initial public offering (IPO) in history, but has since faced a decline and is currently trading below the initial offering price of $135.

The drop in stock price on Friday occurred after the company canceled its Starship rocket launch due to a motor issue.

SpaceX announced that it would make another attempt to launch Starship after canceling the mission on Thursday. Musk later announced on social media platform X that the company would replace two Raptor engines, which is likely to delay the next launch until early next week.

Brian Gesuale, an analyst at Raymond James, wrote in a note to clients on Friday:

"Such anomalies will remain an integral part of the aggressive development of Starship (pushing the boundaries of reusability, payload capacity, and high speed for deploying Starlink V3 and future Artemis missions)."

Gesuale noted that even with this delay, the launch next week would reduce the time between Starship flights from 221 days in the past to less than 60 days.

On July 7, Gesuale initiated coverage of SpaceX stock with a Strong Buy rating and a price target of $800, the highest on Wall Street, representing about a 545% increase from the stock's closing price on Friday.

Starship is central to SpaceX's plans to place data centers in space, expand the Starlink satellite communication network, and ultimately send humans to the Moon and Mars. According to the company's IPO prospectus in June, SpaceX has spent over $15 billion developing Starship.

Despite the recent widespread selling of shares, Wall Street remains generally optimistic about this stock; over 80% of analysts surveyed by Bloomberg have rated it a buy. The average price target of $235.34 indicates a potential growth of about 90% from current levels.

The company, which joined the Nasdaq 100 Index earlier this month, is facing a long lock-up period for internal shareholders, which will gradually release their shares to the market over the coming months.

The company's stock briefly rose after a Wall Street Journal report about SpaceX negotiating to sell computing power to the U.S. Department of Defense. The company has similar agreements with Google (a subsidiary of Alphabet) and Anthropic.

The decline in SpaceX's stock threatens the boom in IPOs related to artificial intelligence. AI was central to SpaceX's pitch for its IPO, as the company seeks to establish data centers in space to capture a dominant share of an estimated $26.5 trillion target market.

This unprecedented stock offering has increased the activity of the largest investment banks on Wall Street, which have earned their highest revenues from advising on stock offerings since the second quarter of 2021.

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