SpaceX shares just fell below their IPO price: what’s going on

SpaceX shares are now trading below their IPO price of $135, after a sharp sell-off on Friday wiped out more than $1 trillion in market value from the company’s record high.

The stock dropped as much as 6.9% in early US trading to $122.12 a share before recovering some of its losses. At that level, the aerospace and artificial intelligence company’s market value stood at $1.61 trillion, down from its peak of $2.64 trillion seen at the close of June 16, its third trading session, according to a Bloomberg report.

SpaceX, formally named Space Exploration Technologies Corp., had surged following what was billed as the largest initial public offering in history before the recent reversal. Friday’s decline followed the company’s decision to abort the launch of its Starship rocket because of an engine-related problem, with SpaceX saying another attempt would be made within the next few days.

Investors taking short positions against the stock — who borrow shares, sell them and later seek to repurchase them at a lower price to book a profit — have continued to increase their bearish wagers as SpaceX shares retreated from their post-listing high of $225.64 toward the IPO price. Short sellers have accumulated an estimated $8.7 billion in unrealised gains since the IPO, according to data from analytics firm Ortex Technologies cited by Reuters.

Earlier this month, SpaceX was added to the Nasdaq-100 Index and received a series of bullish analyst ratings, with the stock currently carrying an average 12-month price target of $235.34, well above current levels.

SpaceX’s high market valuation has made it an attractive target for investors who believe the stock is overpriced. At the same time, strong participation from retail and institutional investors, combined with founder Elon Musk’s long history of publicly confronting short sellers, continues to make bearish bets on the company a high-risk strategy.

Wikimedia Commons/by Steve Jurvetson