Market Volatility and Unexpected Decline
SpaceX, the space enterprise led by Elon Musk, experienced a significant drop in its stock price on the 7th, with shares falling 6.8%. This decline occurred on the day the company was added to the Nasdaq 100 Index. The closing price of $149.47 remained above its initial public offering (IPO) price of $135 but fell below its opening price of $150 on the IPO day, June 12. Despite the expected positive impact from index inclusion and “buy” reports from major Wall Street investment banks, the market was surprised by this downturn.
Stock Falls Below Opening Price Despite Optimism
SpaceX failed to benefit from the typical index inclusion effect. The Nasdaq 100 consists of the top 100 non-financial companies by market capitalization in the Nasdaq market, with global index funds and exchange-traded funds (ETFs) replicating the index. Wall Street estimated that the inclusion could trigger “mechanical buying” worth up to $27 billion for SpaceX shares.
However, despite the optimism from major investment banks issuing “buy” ratings, the stock declined. JP Morgan set a target price of $225, Morgan Stanley $300, Goldman Sachs $205, Deutsche Bank $255, Bank of America $235, and UBS $210—all significantly above the current price. Deutsche Bank noted, “SpaceX has built a platform spanning transportation, communications, and artificial intelligence (AI), making it difficult to find competitors challenging its entry barriers in almost every field.”
Nevertheless, the stock moved in the opposite direction. SpaceX, which debuted as the largest-ever IPO by raising $75 billion on June 12, initially surged past $200 per share but later turned downward, giving up its opening price on the Nasdaq 100 inclusion day. Its market capitalization of approximately $2 trillion ranks it among the top 10 U.S.-listed companies.
Space Sector Sees Broad Decline
SpaceX’s plunge dragged down the entire space sector. Mid- to small-sized launch vehicle company Rocket Lab (-10.40%), space satellite communications firm AST SpaceMobile (-7.97%), unmanned lunar landing company Intuitive Machines (-5.51%), and small-to-midsized launch vehicle company Firefly Aerospace (-8.36%) also fell. Rocket Lab’s first-quarter revenue grew 64% year-on-year but still declined. Analysts attributed the sector-wide sell-off to “risk aversion” despite no changes in individual fundamentals.
Space-themed ETFs also wobbled. The ProShares Space ETF, a leading product, dropped 11.5% over the past month. U.S. financial media MarketWatch described the situation as an “investment coma” driven by SpaceX’s influence on the entire aerospace sector. Domestically listed ETFs like TIGER US Space Tech also fell.
The Wall Street Journal (WSJ) reported that hedge funds and short-term investors might have already priced in the expected buying pressure from Nasdaq 100 inclusion. Analysts also noted that Samsung Electronics’ preliminary earnings-driven declines in global semiconductor stocks and subsequent Nasdaq weakness likely impacted SpaceX. With semiconductor and big tech stocks experiencing volatility, investors had little room to chase “dream” aerospace stocks. Bank of America expects SpaceX’s price-to-earnings (PER) ratio to be 118x based on 2027 earnings forecasts, though it may drop to 43x by 2028—still far above the Nasdaq 100’s forward PER of around 23x. A surge in oil futures after the U.S. Treasury revoked Iran’s oil sales waivers also affected growth stocks.
The WSJ analyzed that growing concerns about SpaceX’s funding stability contributed to the drop. SpaceX raised around $25 billion via its first-ever bond issuance shortly after its June listing, primarily to repay existing bank loans. David Herbert, a CreditSights managing director, stated, “SpaceX faces significant uncertainties about how much cash it will burn and how much it will borrow in the future.”
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