SpaceX Shares Slide Below IPO Price as Market Value Drops by $1 Trillion

Market Contraction and the $1 Trillion Slide

For a company that briefly catapulted its founder, Elon Musk, to trillionaire status, the recent reversal of fortune has been swift and severe. SpaceX, which reached a record market valuation of $2.64 trillion on June 16—just its third trading session—has since seen that figure evaporate by more than $1 trillion.

The sell-off has been exacerbated by the company’s recent operational hurdles. On July 16, SpaceX was forced to abort the 13th test flight of its Starship launch vehicle shortly before liftoff after four of the Super Heavy booster’s 33 engines failed to ignite. Investors are increasingly questioning the aggressive valuation of a company that is currently trading at about 49 times estimated revenue, a premium that analysts suggest reflects high expectations for its Starlink satellite business and unproven orbital artificial intelligence infrastructure.

Short Sellers and Institutional Pressure

The aggressive retreat has provided a significant windfall for those betting against the aerospace giant. Data from analytics firm Ortex Technologies indicates that short sellers have accumulated an estimated $8.7 billion in unrealized gains since the IPO. According to Ortex co-founder Peter Hillerberg, the bearish sentiment has intensified as the stock price dropped.

Nearly 49% of SpaceX’s free float is currently on loan, a figure that Hillerberg suggests is largely driven by short selling. This high level of bearish activity highlights a deep divide among market observers. While some analysts maintain bullish outlooks—with price targets ranging as high as $800—others, such as CFRA, have set targets as low as $115, citing concerns over the company’s financial model and the heavy capital expenditure required for its AI ambitions.

August Earnings and Lockup Expirations

The market is now bracing for the next potential volatility event: the company’s first post-IPO earnings report, scheduled for August 6. This release is critical not just for the financial figures it will contain, but because it triggers the expiration of lockup periods for early investors and employees.

• Financial Transparency: Investors are looking for clarity on how cash from the profitable Starlink division—which recorded an operating profit of $1.19 billion in the first quarter—is being utilized to offset the $2.47 billion operating loss reported by xAI, a subsidiary incorporated into SpaceX.

With the company having recently issued $25 billion in corporate bonds to repay debt, the pressure to demonstrate that its long-term vision—spanning satellite connectivity, reusable rockets, and AI data centers—can be converted into sustainable cash flow has never been higher.

For now, the company faces a dual challenge: restoring confidence in the reliability of its Starship program and preparing for the massive influx of shares expected to enter the market next month. Whether the stock finds a floor in August will depend on how institutional investors weigh those future growth scenarios against the immediate reality of the company’s current operating losses.

Sources: gizmodo.com.