Space Exploration Technologies (NASDAQ: SPCX) completed its landmark initial public offering (IPO) on June 12. Investor enthusiasm propelled SpaceX stock sharply higher than the IPO price, with shares opening on the Nasdaq around $150 on the first day of trading and closing near $161. The offering valued SpaceX at more than $2 trillion — making it the largest IPO in history.
Momentum continued briefly as the stock reached an intraday peak of $225.64 just days after the IPO. However, shares have since given back all of those gains and then some.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a “Double Down” signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same “Total Conviction” signal is flashing for a company 1/100th the size of Nvidia. Continue »
As of the close of trading on Friday, SpaceX stock was trading at just $123.99. This represents a decline of 45% from its post-listing high, and a drop of 17% from its first-day opening price. Is now a good time to buy the dip in SpaceX stock, or should retail investors who have avoided the volatility so far keep sitting on their hands?
What has driven SpaceX’s volatility?
The initial surge in SpaceX stock reflected powerful, narrative-driven momentum. Investors bought into the company’s multipronged vision: expanding the Starlink satellite constellation for global broadband, advancing reusable rocket technology, and exploring ambitious artificial intelligence (AI) applications such as orbital data centers. Elon Musk’s personal brand certainly added to the buzz around the stock, drawing both retail and institutional buyers into what felt like a once-in-a-generation opportunity.
Over the last few weeks, the enthusiasm around SpaceX has met countervailing forces. Questions are rising about the company’s valuation relative to its fairly modest revenue base and its still-negative earnings profile. Skeptics also note the capital-intensive nature of SpaceX’s various businesses and the long timelines that would be required to turn its ambitious plans into businesses capable of delivering consistent revenues and profits.
Analyzing other notable IPOs in recent history
History offers useful context through other high-profile technology IPOs. Snowflake went public in September 2020 at roughly $250 per share. One year later, the stock had climbed by more than 30% amid strong demand for cloud data platforms. Yet the stock later experienced significant volatility and meaningful drawdowns as growth expectations for the company moderated.
