SpaceX Has Nosedived 50% From Its All-Time High, and It May Realistically Lose Another 50% Before Its Valuation Makes Any Sense
Key Points
Although SpaceX's initial public offering (IPO) rewrote Wall Street's record books, the company's shares have now lost half their value.
Reality has begun to set in, with Elon Musk's company having a lot to prove from an operating and valuation standpoint.
Moreover, investors have consistently overestimated the adoption timeline of every game-changing technology for more than three decades.
- 10 stocks we like better than Space Exploration Technologies ›
On June 12, Elon Musk's artificial intelligence (AI) and space infrastructure conglomerate rewrote Wall Street's record books. Including the underwriters' overallotment, Space Exploration Technologies (SpaceX) (NASDAQ: SPCX) raised $85.7 billion and vaulted to a valuation of nearly $3 trillion just days after its initial public offering (IPO).
But this initial buzz has quickly faded. Since peaking at $225.64 per share on June 16, SpaceX shares have plunged roughly 50% to $113.37 (its after-hours closing price on July 24).
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »
Statistically, the average year-one max drawdown in technology-driven IPOs over the last 14 years is 55%, according to data from Truist Financial. Thus far, SpaceX is par for the course. However, history suggests that things may get considerably worse before they have any chance of turning around.
Image source: Getty Images.
SpaceX's IPO-mania has faded away
Aside from the buzz of going public, SpaceX's stock was initially driven by newly amended rules that allowed for its early inclusion in the Nasdaq-100, Russell 1000, and Russell 3000. Investors piled in with the expectation that passive/index funds would spend tens of billions of dollars purchasing SpaceX shares.
Unfortunately, reality is beginning to set in. Musk's trillion-dollar AI and space giant is set to report its quarterly operating results on Aug. 4. While AI start-up xAI has landed a few notable compute deals, SpaceX isn't particularly close to recurring profits, nor has it yet established that its operations are sustainable.
Great look at the SpaceX shares unlock schedule as well as the potential passive buying schedule from @JSeyff @FrancisSharoon Depending on the early post-IPO returns, this could really play with and disperse the returns of "passive" funds (which is why there's arguably no such... pic.twitter.com/KOuEkJlngF
-- Eric Balchunas (@EricBalchunas) May 28, 2026
Additionally, some early release-eligible insiders (high-ranking executives, board members, and early investors) can begin selling some of their shares two trading days after SpaceX reports its quarterly results. SpaceX's accelerated and staggered share unlock schedule may be nothing more than a massive wealth transfer from retail investors to insiders.
Valuation concerns are also clearly in the picture. Even after a 50% drawdown from its all-time high, SpaceX is trading at an estimated 38 times forecast sales this year. No company at the forefront of any game-changing trend (let alone two: AI and the space economy) has ever sustained a price-to-sales ratio above 30 for any considerable period.
Image source: Getty Images.
Historical precedent suggests SpaceX can lose another 50%
However, history might just be the most glaring issue for SpaceX.
Although AI is the hottest technological trend since the advent and proliferation of the internet in the mid-1990s, we've witnessed every next-big-thing technology for more than three decades navigate a bubble-bursting event. This is to say that investors have persistently overshot the adoption and/or optimization timeline of every game-changing technology for decades -- and there's no reason to believe AI is an exception.
Stock market bubbles throughout history...
-- Geiger Capital (@Geiger_Capital) May 8, 2026
AI stocks now ~40% of the market. pic.twitter.com/RxSAh09k6F
SpaceX securing significant compute deals from Alphabet and Anthropic demonstrates that AI doesn't have an adoption issue. But we're likely several years away from businesses optimizing AI solutions to boost their sales and profits. It took until after the dot-com bubble burst before internet-driven companies understood how to maximize this technology, and AI is likely on a similar path.
According to SpaceX's prospectus, xAI represents 93% of its estimated $28.5 trillion addressable market. If the AI bubble bursts, as history suggests it will, SpaceX will have little in the way of a foundation to fall back on.
Based on history, SpaceX could realistically lose another 50% before its valuation even comes close to making sense.
Should you buy stock in Space Exploration Technologies right now?
Before you buy stock in Space Exploration Technologies, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Space Exploration Technologies wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $377,990!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,269,518!*
Now, it’s worth noting Stock Advisor’s total average return is 896% — a market-crushing outperformance compared to 206% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
See the 10 stocks »
*Stock Advisor returns as of July 28, 2026.
Sean Williams has positions in Alphabet. The Motley Fool has positions in and recommends Alphabet and Truist Financial. The Motley Fool has a disclosure policy.
Recommended Articles
