SpaceX Shares Lose Post-IPO Momentum as Stock Falls Below IPO Price for First Time

Elon Musk-led SpaceX shares fell below their initial public offering (IPO) price for the first time on Wednesday, wiping out the gains made after the company's blockbuster market debut last month and raising fresh questions over whether investor enthusiasm can support its lofty valuation.

The stock touched an intraday low of $132.15, below its $135 IPO price, before recovering to close at $135.27, down 0.6% for the day. The decline marked the fourth consecutive session of losses and the stock's lowest level since it began trading in June.

The reversal comes after a volatile first month on the market. SpaceX shares had surged nearly 50% in their first three trading sessions before giving up much of those gains in subsequent sessions.

Valuation, AI Spending Concerns Weigh on Stock

Reuters quoted Matthew Maley, chief market strategist at Miller Tabak, as saying the slide below the IPO price risks reinforcing the perception that the stock's early rally was driven more by speculation than underlying fundamentals.

Bloomberg reported that investors are also becoming more cautious about SpaceX's artificial intelligence (AI) ambitions, with growing scrutiny over the heavy investment needed to support its AI business amid broader concerns about returns from AI-related spending.

Another potential test for the stock lies ahead. The company is expected to report its first quarterly earnings in the coming weeks, after which the first lock-up period for early investors will expire. The report also said that any increase in selling by existing shareholders after the restrictions are lifted could add further pressure on the stock.

Analysts Stay Positive Despite Recent Decline

SpaceX's early gains were also supported by its inclusion in the Nasdaq 100 and Russell 1000 indices, which triggered billions of dollars in purchases by passive index-tracking funds. However, broader weakness in AI-linked technology stocks has added to pressure on the shares.

Despite the recent decline, Wall Street remains largely optimistic about the company's long-term prospects. Bloomberg reported that more than 80% of analysts covering the stock have a buy-equivalent rating, with the average price target implying roughly 76% upside from current levels.

Market participants also see the recent weakness as part of the normal price discovery process for newly listed companies, Reuters reported. The agency said SpaceX's performance could shape investor sentiment towards future high-profile IPOs, including those of AI companies such as OpenAI and Anthropic.