SpaceX dips below $135 IPO price as Starship test looms

Key Takeaways

• SpaceX shares briefly dropped below $135, the June 12 IPO price, after peaking above $200 in the days following the offering
• Only 4% of SpaceX shares trade publicly, creating thin volume and volatile price swings
• Thursday's Starship test launch is the first since a May booster failure and the first since the IPO

SpaceX shares slipped below $135 on Wednesday, dipping beneath the price Elon Musk's company set for its June 12 IPO that raised nearly $86 billion. The stock touched $133 before recovering to hover around the IPO level. One month after going public, the company that briefly rivaled Amazon and Microsoft in market cap faces its first sustained downturn and a high-stakes rocket test on Thursday.

What happened to the post-IPO rally?

SpaceX shares surged past $200 in the days after listing on the Nasdaq. That run didn't last. The stock has declined almost every week since, shedding roughly a third of its peak value. Bonds the company issued after the IPO are also underwater.

Part of the volatility stems from a thin float. Only 4% of SpaceX's total shares trade publicly. Low supply plus relentless attention creates exaggerated swings on modest volume. But thin floats don't explain a month-long slide. Markets appear to be reassessing the premium they're willing to pay for Musk's interplanetary ambitions, part of a broader cooldown in tech stocks.

Why SpaceX's price matters beyond SpaceX

The company's valuation is a proxy for investor appetite for moonshot bets. Anthropic and OpenAI have both filed confidentially for IPOs. Neither has set a date, but bankers and founders are watching SpaceX's tape to gauge how aggressive they can be on pricing. A prolonged SpaceX slump could cool expectations for AI IPOs that carry similar blends of hype, massive capital needs, and long roads to profitability.

SpaceX also carries symbolic weight. It's the first megacap tech IPO since the 2022 downturn, and its performance signals whether public markets have truly reopened for companies valued on vision rather than near-term earnings.

Thursday's Starship test adds uncertainty

On Thursday, SpaceX will launch Starship for the first time since a booster failure in May and the first time as a public company. The rocket remains in active development. Failures are expected, by design. SpaceX's approach is to fly, fail, and fix.

This flight won't attempt to recover the booster or upper stage. Both will simulate a landing in the Gulf of Mexico, meaning both will end in controlled explosions regardless of whether the flight plan succeeds. For long-time SpaceX watchers, that's routine. For new retail shareholders, watching an $86 billion company's flagship product deliberately explode may require a different stomach.

The durability question

SpaceX's revenue base is solid. The company operates the only reusable orbital rocket, dominates commercial launch contracts, and runs Starlink, a satellite internet service with over 6,000 satellites in orbit and growing subscription revenue. The question isn't whether SpaceX is a real business. It's whether the business justifies a valuation that at its peak matched two of the most profitable companies in history.

Musk has promised Mars colonies, point-to-point Earth travel, and a Starlink constellation that could eventually serve billions. Those are decade-long bets. Public markets, historically, have punished companies that ask shareholders to wait that long. The next few weeks will test whether SpaceX can hold investor confidence through the inevitable setbacks of rocket development.

Frequently Asked Questions

Why did SpaceX shares fall below the IPO price?

A combination of thin trading volume (only 4% of shares are public), broader tech stock weakness, and investor reassessment of the premium on Musk's long-term vision.

What is the SpaceX float and why does it matter?

The float is the percentage of shares available for public trading. SpaceX's 4% float is unusually small, meaning modest buy or sell orders can cause large price swings.

How does SpaceX's stock affect OpenAI and Anthropic IPO plans?

Both companies have filed confidentially for IPOs. SpaceX's performance is a signal of public market appetite for high-valuation, pre-profit tech companies.

What happens in Thursday's Starship launch?

SpaceX will test the Starship rocket with planned water landings in the Gulf of Mexico. Both booster and upper stage will end in explosions by design, as the company is not attempting recovery on this flight.

Source: TechCrunch / Sean O'Kane