SpaceX Stock Has Plunged 3 Days in a Row. Is This a Red Flag or a Buying Opportunity?

Space Exploration Technologies (NASDAQ: SPCX) has taken investors on quite a roller coaster ride since its highly successful IPO. Just four days after raising $85 billion at a share price of $135, SpaceX reached as high as $225.64, and was temporarily more valuable than both Microsoft (NASDAQ: MSFT) and Amazon (NASDAQ: AMZN).

Now, the stock has reversed course. While SpaceX still trades above its IPO price (at least, for now, shares have fallen for three days in a row, including a 16% decline on Monday. In this article, we'll take a look at what led to the decline and whether the stock could be a buying opportunity now.

Image source: Getty Images.

Why did SpaceX's stock fall?

In just three days, SpaceX has retreated from its all-time high and has given back hundreds of billions of dollars in market capitalization. To be perfectly clear, there isn't any alarmingly bad news involving the company, but there are some reasons behind the price action.

The first is likely to be simple profit-taking following the stock's initial post-IPO rally. After all, many people bought shares at $135 and understandably could have been tempted to hit the sell button when it passed $200 after just a few days. The stock's initial rally was likely due to an oversubscribed IPO, meaning there was more demand for shares than there were shares available. Once the supply demand dynamics started to shift, it's not surprising to see the price move in the other direction.

Monday's decline was the worst of the three days, and came on the same day that SpaceX announced a $20 billion bond offering, with the goal of using the proceeds to repay its outstanding bridge loan. To be clear, investors already knew about the bridge loan (it was used to fund the xAI acquisition), and refinancing it with investment-grade bonds isn't exactly a bad move. However, the fact that SpaceX is raising additional capital to repay it, even with over $100 billion on its balance sheet, suggests the company's capital needs could be higher than investors thought.

The news isn't all bad

SpaceX has reported several key wins, including one that got somewhat buried in the news on Monday. In addition to the deals SpaceX has already signed with Anthropic and Alphabet's (NASDAQ: GOOGL)(NASDAQ: GOOG) Google, it also gained a third AI compute customer in the form of Reflection AI, which agreed to pay $150 per month starting in July for access to Nvidia (NASDAQ: NVDA) GPUs in SpaceX's Colossus 2 data center.

This reinforces the thesis that the xAI business isn't just a speculative play about building the Grok model into a serious OpenAI and Anthropic competitor, or building data centers in orbit. SpaceX's AI division is quickly becoming a leader in contracted AI compute, with deals already in place that exceed the company's entire 2025 revenue.

Is SpaceX a buying opportunity?

Let's be clear. Even after three consecutive days of declines, SpaceX is far from being a "cheap" stock. Even if we include the three AI compute deals that include nearly $28 billion in annualized revenue not showing up in the results yet, SpaceX still trades for more than 40 times sales and is not yet profitable.

Having said that, if you were hoping to buy shares at the IPO and felt you had missed out, now could certainly be a second chance to start a position. Just keep in mind that this is a richly priced stock that will need significant future revenue growth and profitability to justify the current valuation, and size your position accordingly. And it could be a good idea to build a position incrementally over time, rather than buying shares all at once. A disciplined approach when investing in a stock like SpaceX can be an excellent way to go.

Matt Frankel, CFP® has positions in Amazon. The Motley Fool has positions in and recommends Alphabet, Amazon, Microsoft, and Nvidia. The Motley Fool has a disclosure policy.