SpaceX falls for third day after announcing bond sale, sheds more than US$300 billion in value

[NEW YORK] SpaceX shares slipped for a third straight day after the Elon Musk-led company said it is selling investment-grade bonds for the first time, part of what is expected to be a massive borrowing spree to fund its artificial-intelligence ambitions.

The stock fell as much as 13 per cent on Monday (Jun 22) in New York, shedding more than US$300 billion in market value and briefly dropping below the level it closed at on the first day of trading. The drop follows a retreat of more than 8 per cent over Jun 17 and 18, before the US market closed on Jun 19 for the Juneteenth federal holiday.

“Sellers are back in control. Anyone in the world who wanted to buy this has bought it already,” said Michael O’Rourke, chief market strategist at JonesTrading.

SpaceX’s first days of trading following its record US$75 billion initial public offering were met with the type of volatility generally associated with new IPOs that have a low float – 4.2 per cent of total shares outstanding were available to trade on Day 1 – and high interest from retail investors. Still, the shares were 37 per cent higher than their US$135 IPO price at Jun 18’s close, with a US$2.4 trillion market capitalisation.

The rocket, satellite and AI conglomerate is seeking to raise at least US$20 billion from the first bond offering, Bloomberg reported on Jun 19.

The company’s embrace of artificial intelligence with the acquisition of Musk’s xAI in February meant investors closely watched the listing ahead of IPO prospects of competitors Anthropic and OpenAI, both of which plan to go public as soon as in 2026 with valuations expected to be around US$1 trillion.

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Retail trading in SpaceX, officially named Space Exploration Technologies, was the strongest of any IPO in recent history, with the cohort buying net US$405 million in the first five sessions according to Vanda Research. Retail investors bought more SpaceX in the week ended Jun 21 than buying across all Magnificent Seven stocks combined, the data showed.

The stock was initiated with a recommendation of sector weight at KeyBanc Capital Markets, the first hold-equivalent rating according to data tracked by Bloomberg. Analysts led by Michael Leshock wrote that SpaceX is set to remain the leader in space-launch and adjacent verticals, but much of the long-term value is already captured in the stock price.

SpaceX “possesses significant disruptive growth avenues, though we believe this is reflected in current valuation and risk/reward appears balanced, in our view,” he wrote. BLOOMBERG