SpaceX selloff an ominous sign as lockup expiry looms
The dip in SpaceX’s shares below its blockbuster IPO price of $135 a share is an ominous sign for Elon Musk’s internet and rocket company as it faces more potential volatility in early August, when the number of shares available for trading on the Nasdaq stands to increase significantly.
The company’s stock on Wednesday dipped as low as $132.15 before closing at $135.27. It has now tumbled 33% from its record close in the immediate days after the public sale raised a record $75 billion on June 11.
So-called “lockup” restrictions on insiders will lift in coming months, potentially flooding the market with additional shares.
The decline highlights how quickly investor enthusiasm can fade, even for a company backed by [Elon Musk](Elon Musk Archives | Finbold) and involved with key growth narratives such as artificial intelligence (AI*). Primarily, the selloff comes as investors reassess SpaceX’s valuation and financial outlook as the first earnings date in August draws near.
Among the key concerns is SpaceX’s $4.9 billion net loss in 2025 as heavy investment in AI infrastructure and Starship development weighed on its bottom line.
Space X appears to be a harder sale than the Tesla EV.
Nobody needed to “reassess”. A quick glance at the numbers told the story in plain black and white. There were multiple threads here about it, there were front page stories in the Wall Street Journal, New York Times and elsewhere, but memers gonna meme.
Now they pay. Maybe they can make it up on T***p coins?
Great question. I had to put it in the too hard pile. But I’m confident the fair value is much lower than the current price.
The launch business is pretty exciting, but it is not yet profitable, and they are by far their own biggest customer. There is some competition starting to arise in the shadows, however. The launch business is growing fast, at a respectable 15%/year but not crazy fast.
Starlink is very profitable which tech-like margins. IMO they are exaggerating the upside though. Amazon Leo will be a competitor soon as well.
Then there is the data center in space portion of the business. We’ve had a few discussions about that here before. It is unknown if it will ever work out. Google is working on a similar project (but sounds superior to this layman) and they estimate it will be about 10 years before space data centers are profitable. In the meantime, it will require absolutely massive capex.
And then the AI portion. The Grok models are well-regarded, but Grok’s portion of the market (however you define the market) is tiny compared to the other players. And where ever they build their data centers, the capex will be massive.
Now we get to the stock price. SpaceX P/S today is 96. If it sales grew at about 23%/year for the next 10 years and the stock price remained the same, it would have more a sane, but still expensive P/S of 10.7.
Not coincidently, one of its main competitors in the AI space, Alphabet, currently has a P/S of 10.7. Coincidently Alphabet is currently growing revenues at about 23%/year. But unlike SpaceX, Alphabet makes profits. Lots of profits.
So, I don’t know what a good value for SpaceX might be, but I think it is more like $13 than $130.
Fair value is educated guesswork as the future is unknowable
Peer pricing might be a better indicator but, does SpaceX have comparable peers?
IPO pricing is driven by animal spirits - Keynes used the term to explain why economic cycles, market bubbles, and recessions often defy purely rational, mathematical calculations. (Google AI)