“Houston, we have a problem” — an iconic phrase that (conveniently for newsletter writers) now aptly describes SpaceX’s brief life as a publicly traded company.
What happened: After pulling off the biggest IPO in history and reaching a market cap larger than Amazon’s, SpaceX shares are now trading below their initial listing price of $135 for the first time.
Shares in Elon Musk’s rocket/satellite internet/AI business popped by more than 25% in the days after the IPO, but have since fallen almost 40%, closing last week at $123.99.
Short seller interest in the company has also grown — around 30% of SpaceX shares on the market have been borrowed to sell short.
Yields on SpaceX bonds have also surged, a symptom of waning investor confidence in the company.
Why it’s happening: Last week’s failed Starship launch didn’t help matters, but SpaceX’s doldrums may be more about market-wide questions about whether AI companies will ever be able to turn a profit — something SpaceX will have to nail for its valuation to make sense in the long term.
Morgan Stanley, in a bullish analysis of the company, projects its AI business making up the majority of SpaceX’s revenue by next year and growing by orders of magnitude in the years ahead.
The rest of SpaceX’s business model is also speculative, depending as it does on things that do not yet exist, like fully reusable rockets and orbital data centres.
Why it matters: Steep losses for early buyers of SpaceX shares could cast a pall over the next two big public offerings on the calendar: Anthropic and OpenAI.—TS
