SpaceX comes back to Earth

SpaceX is already giving investors buyer’s remorse.

Elon Musk’s golden child fell 5.43% today after the company called off a test flight for its highly anticipated Starship rocket at the last minute Thursday night. Today’s decline caps six straight days of losses for SpaceX—putting it well below its IPO price of $135, and roughly 38% below its June peak.

SpaceX raised $85.7 billion in the biggest IPO in history back in June, as investors who’ve long been fans of Musk’s intergalactic vision finally got a chance to own the stock itself. Retail investors weren’t the only ones glazing SpaceX, either: Wall Street pros have been resoundingly bullish, with 14 out of 15 firms that cover the stock issuing a Buy rating.

Yet now, everyone is waiting to see if SpaceX can meet the high bar investors have set for it. After all, with a record-breaking valuation, SpaceX has been running more on hype than on actual proven financial results.

Shoot for the stars

This isn’t the first time Starship flopped: Back in May, the rocket crashed in the Gulf of Mexico, triggering an investigation from the FAA.

While Musk has promised grandiose visions of datacenters floating through the cosmos, the core of his business is actually getting rockets into space in the first place. According to Wedbush analyst Dan Ives, Starship is the “essential layer” for SpaceX’s success.

“The new models for its Starship fleet not only reduce the cost per launch, but can also carry a larger number of Starlink satellites on its wings, making it an incremental driver of its highly profitable broadband connectivity business,” explained Ives in a note initiating coverage of the stock.

The bears are bearing

With a stock as hyped up as SpaceX, of course there’s going to be haters: Roughly 110 million shares of SpaceX were borrowed and sold by short sellers, representing roughly 17% of available shares, Barron’s reported.

The ‘I told you so’s’ might be onto something: Historically, nearly half of large IPOs are below their IPO price by their third year of trading. On top of that, one expected boon for the company—a merger with Tesla—probably won’t happen anytime soon.

But there’s good news looking at the historical record, too. Some IPOs that flounder in their first years going public end up being hugely successful. Just look at Meta Platforms: The social media network plateaued in its first few months of trading, but has climbed over 1,700% since going public.

Whether this journey makes it to the moon or crashes and burns is still anyone’s guess.—LB