After wiping out more than $600 billion in value in three days, SpaceX’s sharp correction has sparked debate among investors: Is this a rare buying opportunity or a warning sign?
The company, after a record $75 billion IPO on June 12, briefly surpassing Amazon and Microsoft in market capitalization. However, after the initial rally in the stock, investor sentiment has started to weaken.
SpaceX witnessed over $600 billion erased from its valuation after three consecutive days of losses,. Monday accounted for the biggest blow, with the stock tumbling 16% and shedding roughly $400 billion in market value—the second-largest one-day wipeout on record. The early slide also took the market cap below $2 trillion.
The stock managed a modest recovery on Tuesday, closing nearly 1% higher and snapping its three-session decline.
Noting that this is too early to start draw a conclusion about the future of the compary, Viram Shah, Founder & CEO, Vested Finance, says, “The thing to keep in mind is that SPCX is barely two weeks old as a listed stock, so what we’re watching right now is price discovery happening in real time. It ran up sharply from the $135 IPO price to around $225, and now it’s given most of that back and some of that is just profit-taking after a vertical move, some of it is the market reacting to news like the planned bond sale, and a lot of it is the float.”
“Only about 4-5% of the shares are actually trading freely, so relatively small flows can swing the price several percent in either direction. That cuts both ways — it amplified the run-up, and it’s amplifying the pullback now,” he adds.
So is this sharp fall presents a chance to buy SpaceX at a discounted valuation – many are wondering!
Is it a opprtunity to buy SpaceX at a low price?
On whether this is an opportunity, that’s not a call we would make for anyone as it really depends on the individual’s horizon and risk appetite, Shah says
“What we would say is that a newly listed, thinly floated company is going to be volatile by nature, and there are known events on the calendar — lock-up expiries starting around the late-July and August earnings window that could add more supply and keep things choppy.”
On the other side, the bull case people point to is the revenue trajectory and the AI infrastructure deals. Both views are out there, he adds
Meanwhile, in a cautious note, Nic Puckrin, cross-asset analyst and founder of Coin Bureau told Reuter on Tuesday, “I’d be cautious about seeing this as a second-chance buying opportunity. The drop looks dramatic in scale, but these swings aren’t unusual for a stock with such a small public float.”