Elon Musk’s SpaceX loses over $600 billion in just 3 Days after record IPO: Here’s what happened

SpaceX had barely settled into life as a listed company before its stock came under pressure. In just three trading sessions, the company lost more than $600 billion in market value. Even after the sharp fall, it continues to be one of the world’s most valuable companies.  Also Read: Oracle cuts 21,000 jobs as AI investments accelerate

The company had raised a record $75 billion through its IPO, attracting investors who wanted a stake in its businesses across space launches, satellite communications and artificial intelligence. However, after the initial excitement, the stock has come under pressure as investors reassessed its valuation.  Also Read: Ai+ Nova 2 Neo and Nova 2 Pro 5G launched: Madhav Sheth throws open review challenge

To put the scale of the decline into perspective, the value erased over the last three days is nearly three times the combined net worth of Reliance Industries Chairman Mukesh Ambani and Adani Group Chairman Gautam Adani, according to the Bloomberg Billionaires Index.  Also Read: Adobe brings Firefly AI Assistant to Photoshop, Premiere, Illustrator and more: Here’s what it can do

Why SpaceX shares are falling 

SpaceX shares dropped 16 per cent on Monday to close at $154.60, extending their three-day decline to 23%. Even after the selloff, the stock remains above its IPO price of $135 and the company is still valued at more than $2 trillion. 

Market experts believe one of the biggest reasons behind the decline is profit-booking. After a strong rally following the IPO, many early investors appear to have locked in gains. 

Michael O’Rourke, Chief Market Strategist at JonesTrading, told Bloomberg that sellers have regained control of the stock, adding that most investors interested in buying had already entered during the initial rally. His comments reflect a broader concern that SpaceX’s valuation had risen faster than the company’s fundamentals. 

AI plans also under scrutiny 

SpaceX’s growing focus on artificial intelligence is also being watched closely. According to Bloomberg, the company is looking to raise at least $20 billion through its first investment-grade bond offering to support those efforts. 

It has also entered into a multibillion-dollar agreement to provide computing resources to Reflection AI, an artificial intelligence startup. While some investors see this as a move that could strengthen the company’s long-term growth, others feel SpaceX is taking on too much at a time when expectations are already high. 

The acquisition of xAI earlier this year has also changed how many people look at SpaceX. It is no longer being looked at as just a space company. For many investors, it is now becoming a broader technology company with a growing focus on AI. 

Retail investors fuelled the rally 

Retail investors were a big reason behind SpaceX’s strong start after the IPO. Data from Vanda Research, cited by Bloomberg, showed that retail investors bought a net $405 million worth of SpaceX shares during the first five trading sessions. 

During that period, the company reportedly attracted more retail investment than all of the Magnificent Seven technology stocks combined. That strong buying helped push the stock higher in its early days, but it also meant that any change in investor sentiment could lead to equally sharp swings. 

Bloomberg also reported that while retail investors continued buying SpaceX shares during the recent decline, the pace of those purchases slowed compared to the previous week. 

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Analysts remain cautious 

As analysts have started initiating coverage on the stock, some have adopted a cautious approach. KeyBanc Capital Markets began coverage with a hold-equivalent rating, saying SpaceX remains the leader in space launches and related businesses, but much of its future growth could already be reflected in the current valuation.