SpaceX Stock Slips Below IPO Price as Starship Launch Looms

SpaceX's shares fell to just above $135 on Wednesday, the price that CEO Elon Musk and his company chose ahead of its blockbuster June 12 IPO that raked in nearly $86 billion.

The company's stock spent much of the day below that IPO price, at one point dipping beneath $133 per share, before it traded back up to finish at $135.27. The dip on Wednesday followed a steady decline in the month since the company went public.

SpaceX initially saw its stock price rise to more than $200 in the days after it went public, briefly giving it a valuation that rivaled tech giants like Amazon and Microsoft. Its shares have lost value basically every week since reaching that high point.

A Volatile First Month

Some of the volatility is attributable to the fact that just 4% of the company's total shares are trading on the Nasdaq. That small "float," as it's known, combined with an immense amount of constant attention on the company, has created wild swings during the first month of trading. When only a small portion of shares are available to the public, even modest trading activity can cause dramatic price movements in either direction.

The markets also appear to be sobering up on CEO Elon Musk's grand vision for the company, part of a broader deflation in tech stocks over the last month. Not only has SpaceX's stock traded down, but also the bonds the company sold in the wake of the IPO are suffering. This suggests that investors are beginning to question whether the company's ambitious goals can translate into the kind of financial performance that justifies its valuation.

The Broader Implications

A prolonged downturn for SpaceX could have wider effects because the company's stock price is a sign of how investors view the otherworldly promises Musk has made about what his company can accomplish. SpaceX's IPO has also set the table for other Big Tech companies like Anthropic and OpenAI to go public. Both of those companies have filed confidentially for an IPO. While neither has set a date to go public, SpaceX's stock is being closely watched to gauge how successful those IPOs could be.

If SpaceX's stock continues to slide, it could dampen enthusiasm for other high-profile tech IPOs. Investors may become more cautious about backing companies with ambitious long-term visions that have yet to translate into consistent profitability. On the other hand, if SpaceX can stabilize its stock price and demonstrate progress on its core business, it could restore confidence in the broader tech IPO market.

The Starship Test

SpaceX is about to face another early test of the durability of its stock price. On Thursday, the company will test launch its Starship rocket for the first time since the IPO. Starship is still very much in development, which means it is prone to failures the result of SpaceX's "fly, fail, fix" approach. This will be the first Starship flight since it experienced a booster failure in May.

And once again, the company does not plan to try to recover the Starship booster or upper stage on this flight, instead opting to have them simulate a landing in the Gulf of Mexico. That means both parts of the overall Starship rocket system will end in an explosion no matter what, even if they don't run into any problems during the flight plan. The test is designed to gather data, not to achieve a perfect landing.

For investors, the test represents a moment of truth. A successful flight could boost confidence in SpaceX's ability to deliver on its promises. A failure, while expected in the development process, could further erode the stock price and raise questions about the company's timeline for delivering on its ambitious goals.

SpaceX's first month as a public company has been a rollercoaster. After an initial surge that briefly made it one of the most valuable companies in the world, its stock has steadily declined, falling below its IPO price. The company now faces the challenge of convincing investors that its long-term vision is worth the wait.

The upcoming Starship test will be a key moment for the company. A successful flight could help stabilize the stock and restore investor confidence. A failure could accelerate the decline and raise questions about the company's ability to deliver on its promises. For now, investors are watching closely, and the outcome of Thursday's test will likely have a significant impact on the company's stock price in the coming days.