- SpaceX stock has crashed by 32% from its highest point this month.
- The decline happened as the post-IPO hype faded and profit-taking continued.
- History shows that most newly listed stocks surge and then retreat.
SpaceX stock price has slumped by 32% from its highest point last week, erasing billions of dollars in value. SPCX dropped to $154 today, with its market capitalization falling to $2.03 trillion. This retreat, together with that of Tesla, has brought Elon Musk’s net worth to $951 billion from this month’s high of $1.2 trillion.
The ongoing SpaceX stock crash aligns with our prediction, which you can read here and here. This retreat is mostly due to the hype surrounding its initial public offering (IPO) fading, and investors are now embracing the new normal.
SPCX stock has dropped as early investors have begun taking profits after it surged by almost 50% shortly after its IPO. It is common for investors to dump soaring shares after their IPOs.
A good example of this is what happened mid-last year when the Circle Internet Group surged to $300 after the IPO and then plunged to $49. The same happened with other companies like Figma, Medline, and Klarna.
READ MORE: How to Short SpaceX Stock After the IPO Surge
SpaceX stock has also plunged due to the actions the company has taken since going public. It announced a $60 billion buyout of Cursor, a popular AI company, and launched a $25 billion bond sale.
There are also lingering concerns about its valuation, with Morningstar analysts valuing the company at less than $1 trillion. In the report, the analysts said:
“We value SpaceX at $63 per share, a 53% discount to the upcoming IPO price. Our valuation is the result of mathematics more than skepticism, reflecting a wide range of possible outcomes for the company’s financial future.”
Is it Safe to Buy the SPCX Stock Dip?
The ongoing SpaceX stock crash has led to diverging opinions among investors and analysts. Some believe it is a good buy, with Goldman Sachs analysts predicting its revenue will quadruple to $474 billion in 2030. The bank believes that the company has a total addressable market of over $22 trillion.
On the other hand, some analysts, such as Morningstar, believe that the stock has more downside to go.
History offers a good answer to where the stock goes from here. For example, Circle initially jumped to $300, then dropped to $49, with its attempts to rebound meeting resistance at $87, and it then resumed the downward trend.
Therefore, there is a risk that the stock will remain under pressure while investors await its first earnings report as a publicly traded company.
In the future, however, there is a likelihood that SpaceX stock will bounce back and move to new record highs. This is what happened with companies like Tesla and Meta Platforms. What is unclear, however, is when it will hit bottom.
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