After its meteoric debut as a public company, SpaceX has had a turbulent time in recent days, as pent-up demand for the stock has waned, alongside broader questions about the exuberance underpinning the artificial intelligence sector.
On Tuesday, SpaceX’s stock price briefly fell below $150, the level where the stock began trading when the company went public just over a week ago. Pressure on its stock price in early trading added to a sharp 16.4% decline Monday after the company began offering a bond sale to investors this week, borrowing more money just over a week after its blockbuster IPO.
The debt deal has helped reignite concerns about the massive corporate spending taking place in debt and equity markets to finance the construction of artificial intelligence infrastructure, and whether such high expectations are realistic.
The stock closed the first day of trading at $161 per share and reached a high of $202 last Wednesday. But since then, it has declined every day. The stock was up 2% at around $157 as of mid-morning Tuesday.
Such volatility is not uncommon for newly listed companies. Before the IPO, investors and analysts had warned that SpaceX’s stock price would likely rise and fall in the days and weeks following its public listing. The company faced such demand for a relatively small number of shares available for purchase that the company’s value soared in its first days of trading.
“What you’ve seen over the last few days is a slight unwinding of some of these extreme positions,” said Philip Straehl, chief investment officer at Morningstar Wealth.
According to JPMorgan analysts, the average price of newly listed stocks rose 32 percent on the first day of trading, but over 12 months it subsequently fell more than 20 percent below its initial offering price. When Meta, then known as Facebook, went public in 2012, its stock price fell about 30% in its first two weeks, but it has risen almost every year since, posting astronomical gains for investors.
Investors who participated in SpaceX’s IPO at a price of $135 per share are still up on their investments. But others who invested in the stock in the days after its market debut saw their gains evaporate.
SpaceX’s fall comes as other tech stocks are under intense pressure globally.
South Korea’s Kospi index, which includes many of the country’s chipmakers, fell 10% overnight Tuesday, although the index remains nearly 100% higher this year. The Philadelphia Exchange Semiconductors Index, a benchmark for investors tracking the sector, has fallen about 6 percent but also remains nearly double its value from earlier in the year.
“It’s hard to ignore some of the speculative elements that have driven market performance over the last two or three months,” Straehl said, adding that such volatility was “not necessarily surprising.”
Investors will also be paying close attention to Micron’s earnings tomorrow. The company makes memory chips used in AI computing, with strong profits likely to help ease market jitters.
“The investment boom is likely to be prolonged, and near-term expectations about its size may need to rise further,” Goldman Sachs analysts said Monday. “But with a lot of value already priced in, markets are more vulnerable to news that challenges an optimistic view.”
