Why SpaceX Stock Plummeted This Week
Key Points
SpaceX stock fell roughly 20% in a week of bearish trading for the broader market.
AI hardware stocks were under pressure this week, and SpaceX's post-IPO excitement faded.
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SpaceX (NASDAQ: SPCX) stock suffered a huge pullback in its second full week of trading following its initial public offering on June 12. The company's share price declined 20.2% in a week of trading that saw the S&P 500 decline roughly 2%, and the Nasdaq Composite fall 4.6%.
In addition to bearish momentum for the broader market, SpaceX's valuation contracted in conjunction with fading post-IPO excitement. The company's share price closed out the week down roughly 4.8% from the $160.95 per share price it had on the day of its public debut, and the stock is now down 24% from its high.
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SpaceX's bullish post-IPO momentum evaporated this week
By most measures, SpaceX's IPO was an enormous success. The company's share price surged above its initial listing price of $135 per share, and it still trades up 13.5% compared to that level. The tech specialist had the biggest IPO in history, and its first stock sale allowed the company to raise $85.7 billion.
On the other hand, early excitement surrounding the company's public debut clearly faded this week. Bearish momentum for the broader market tied to concerns about artificial intelligence (AI) chip stocks likely weighed on SpaceX because the company is making AI processing services a focal point of its growth strategy, and investors hoping to score more quick gains with the stock moved out of positions as positive momentum began to fade.
What's next for SpaceX?
SpaceX stock could continue to be highly volatile in the near term as the market continues to move through a price discovery phase with the equity. With a market capitalization of roughly $2.02 trillion, SpaceX is valued at approximately 108 times last year's revenue.
While the business looks poised to expand at a rapid pace, its highly growth-dependent valuation sets the stage for volatility in the face of company-specific catalysts and assessments and broader trends. With concerns about the macroeconomic picture and whether the powerful bull run for AI stocks is poised to continue, SpaceX is facing a test of valuation pressures early in its history as a publicly traded company.
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Keith Noonan 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.
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