SpaceX Is Already Down 18% From Its High. Here's Why Investors Shouldn't Be Concerned.

In its fifth session as a public company on June 18, Space Exploration Technologies (NASDAQ: SPCX) closed down 3.6% on the day and down about 18% from its all-time intraday high of $225.64 per share on June 16. However, SpaceX is still up big from its initial public offering (IPO) price of $135 and its first-day opening price of $150.

Here's why long-term investors shouldn't be concerned about the volatility.

Image source: Getty Images.

Volatility was inevitable

The nature of SpaceX's business model and the financial engineering of its IPO sowed the seeds for intense volatility.

SpaceX reported a net loss of $4.94 billion in 2025. Its main revenue driver is its Starlink network of low-Earth-orbit satellites, but its artificial intelligence (AI) efforts through xAI could deliver even greater growth potential. The biggest opportunity of them all could be operating a network of millions of AI compute satellites in orbit, the first of which SpaceX expects to deploy in 2028.

SpaceX raised $75 billion from its IPO by selling 555 million shares at $135 a piece. It raised another $10.7 billion from underwriters that exercised their options to buy more shares. This means that the volume of shares available for public trading -- known as the float -- is roughly 5% of the total number of shares outstanding. That figure could grow to reach as much as 37% in late August. But for now, there are relatively few SpaceX shares on the Nasdaq to meet investor demand.

Distinguishing between trading and investing in SpaceX

During volatile periods with individual stocks or the broader market, I often think back to my favorite chapter from The Psychology of Money by Morgan Housel. In that chapter, Housel discussed the importance of knowing what game you're playing.

Some may be buying SpaceX to try to make a quick buck on a weekly trade, others may wait a few months before their patience runs out, and some may be buying the stock with the intention of holding it for multiple years, or maybe even decades, in a retirement account. Those different motives create a figurative tug-of-war over the stock price. And as an individual investor, your goal is to ensure you buy any stock you choose for the right reasons, not at a price driven by greed. Building a diversified portfolio of quality stocks is a far better approach to compounding wealth over time than trying to time the market by jumping in and out of stocks.

Buying SpaceX at a market cap of over $2 trillion makes zero sense based on where the company is today. The company is losing money while fellow $2 trillion club members Nvidia, Alphabet, Apple, Microsoft, Amazon, and Taiwan Semiconductor Manufacturing are generating tens of billions of dollars in profits every quarter.

The long-term investment thesis for SpaceX is built around the premise that its bold bets will eventually pay off. With limited competition and cutting-edge technology, the company is undoubtedly chock-full of upside potential. But that potential, from a business standpoint, won't be realized for several years at least, and maybe even a decade or more.

Buying SpaceX for the right reasons

Traders may be nervous that SpaceX is down 18% from its high. But long-term investors should expect this growth stock to swing wildly with sentiment and market dynamics, driven by shifts in demand versus the number of shares available following insider sales. Investors should only buy SpaceX at this valuation if they have high conviction in the company's long-term vision.

Most investors would probably be better off keeping SpaceX on their watch lists. But a common mistake is to add a stock to a watch list with the intention of buying it at a specific price. This method uses the stock price as the key yardstick rather than the underlying business hitting various milestones. With SpaceX in particular, I think a better approach would be to add the stock to your watch list and chart out the business developments you want to see the company achieve before buying.

I'm intrigued by its plans for mass deployments of data center satellites in space, where they will be able to take advantage of abundant 24/7 solar power, and where they won't be using fresh water for cooling. (They'll instead be cooled via panels that dissipate the heat those servers generate as infrared radiation.) If AI adoption continues to grow, finding ways to manage the AI energy bottleneck could be just as important as building cost-effective data centers.

If SpaceX shows meaningful progress in achieving this challenging technological feat, a valuation higher than today's would be totally justified. But for now, the markets will need more time to weigh its worth as a public company.

Daniel Foelber has positions in Nvidia. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Microsoft, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.