Why SpaceX Stock Is Dropping Again Today
Key Points
SpaceX is seeking to raise $20 billion in a bond offering.
A new AI compute deal with Nvidia-backed ReflectionAI could be worth up to $6.3 billion for SpaceX.
SpaceX revealed it now holds about $100 billion in cash.
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Shares of Space Exploration Technologies (NASDAQ: SPCX) continued to plunge today, and it wasn't just because the early hype is wearing off. The stock was down 9% as of 11:34 a.m. ET, and heading for what would be its third consecutive losing session.
Investors sold the stock early after the company announced its first bond sale as a public company. Shares bounced off the morning low, though, after SpaceX's AI segment announced a deal to sell compute capacity to open-source AI start-up ReflectionAI.
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Image source: Getty Images.
Expect volatility in SpaceX
After raising more than $85 billion from its initial public offering (IPO), SpaceX is issuing bonds, reportedly seeking at least $20 billion in senior unsecured notes to repay outstanding bridge loans. The stock pared some of its initial drop on that news, though, after it also announced it held $100.8 billion in cash and equivalents as of last Friday.
Investors also received news that SpaceXAI, formerly xAI, signed a deal with ReflectionAI to receive $150 million per month in exchange for providing Reflection compute power using Nvidia high-performance GB300 platform. Nvidia's venture capital arm participated in an early funding round for Reflection. That deal could run through 2029 and be worth up to $6.3 billion.
While that's great news for SpaceX's business, the hype surrounding the company's IPO sent shares soaring last week, and some investors have been cashing out. SpaceX stock will likely remain volatile, given its high valuation and the likelihood of business-related announcements.
The recent downtrend is a good lesson for investors: don't get overexcited; be patient until shares reach a more reasonable valuation. And to expect volatility along the way.
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Howard Smith has positions in Nvidia. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.
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