Here's Why SpaceX's Latest Decision Is a Huge Red Flag for Investors

Space Exploration Technologies (NASDAQ: SPCX), better known as SpaceX, has dominated the market headlines recently. It clearly made a splash when it went public as the largest IPO ever, and the stock immediately ran up to over $200 per share in the days following its debut. Now, it's down to about $153 per share due to an untimely announcement.

I think this was a major red flag for investors, and SpaceX would have been wiser to do this a few months down the road.

Image source: Getty Images.

What did SpaceX do to cause the sell-off?

When a company goes public, it often issues additional shares to raise capital for the business. SpaceX was no different, issuing over 83 million shares in its IPO, bringing its total to just under 640 million. It raised $85.7 billion through this, creating a massive cash pile that SpaceX can use to pursue its goals.

For reference, SpaceX's capital expenditures during 2025 were nearly $21 billion. In 2024, that total was $11 billion, indicating a trajectory to double capital expenditures each year amid strong demand for its core products.

With that extra $85.7 billion, SpaceX can easily fund capital expenditures for over a year. So, whether SpaceX decides to build more computing capacity for xAI, launch more Starlink satellites, or invest in its space division, it has a ton of cash ready to deploy and shouldn't need to raise any more money in the near term.

But that's exactly what SpaceX did.

The stock price crash in the last few days was caused by the announcement of a $25 billion bond issue. SpaceX raising an additional $25 billion after its IPO seems a bit untimely and looks bad, since it could have priced its stock higher during the IPO to easily raise that amount. The initial price of the SpaceX IPO was $135, even though it started trading around $150. There was also demand for the stock at $200 per share over the next few days.

This looks like bad financial management and makes me worried about how items like this will be handled in the future. As a result, I'm a bit wary to invest in SpaceX, and I think most investors should be too. SpaceX could still be a solid investment option, but it will take years for these long-term bets to pay off, and the time frame for these other businesses to come to fruition may make other stocks better picks in the meantime.

Keithen Drury has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.