Shares of Elon Musk-owned SpaceX fell after huge success in the first few days of trading. The company debuted on Wall Street on June 12, raising $75 billion at a market valuation of $1.8 trillion.
The space exploration technology company set a fixed price of $135 per share in its IPO. Trading under the ticker SPCX, the stock saw massive growth surpassing $200 and reaching an all-time high of $202 per share. The company’s market valuation reached $2.6 trillion.
However, shares have since stumbled and lost nearly 23 percent and are currently trading at $153 per share. Some analysts described the situation as a buying opportunity for investors; However, others have warned that stocks could fall sharply.
Why is SpaceX losing billions in market value after largest IPO after initial success?
Although the current stock price still offers significant growth from the fixed IPO, history suggests that the company behind satellite internet service Starlink is following a trend frequently observed by Wall Street analysts.
According to Jay Ritter, a finance professor at the University of Florida, there are about 9,000 companies listed on U.S. stock exchanges and most of them saw an increase of 19% on the first day of trading.
Data suggests that most companies saw their shares fall 50% below their IPO price, indicating that SPCX is expected to fall to around $70 per share in the first year of trading.
With annual revenue of around $19.3 billion and a valuation close to $2 trillion, some analysts say the company’s valuation remains exceptionally rich.
Disclaimer: This article is for informational purposes only and should not be considered financial or investment advice.
