Key Takeaways:
Economist Peter Schiff said the artificial-intelligence stock bubble still has significant room to deflate, as shares of Elon Musk's SpaceX extended a decline that has erased more than half their value.
Economist Peter Schiff said the AI-driven stock bubble has "a lot more air" left to come out, as SpaceX shares extended their post-IPO slide to more than 50% from their peak.
"The AI bubble is deflating, but it's got a lot more air left to come out," Schiff, an economist and longtime gold advocate, said in a social-media post. "This is an example of why it's so dangerous to rush into buying a heavily hyped IPO during its first few days of trading."
Space Exploration Technologies Corp., which trades under the ticker SPCX, has lost more than 50% of its value since hitting a record $225.64 on June 16, the first trading day after its initial public offering. The stock closed at $109.96 on July 28, well below its $135 IPO price, and has traded beneath that level for eight consecutive sessions. The selloff has erased more than $1.2 trillion in market value from the June peak, according to Benzinga data. Short sellers have pocketed $15.5 billion on the slide.
Schiff's warning arrives as SPCX faces a critical test on Aug. 6, when an initial lockup period expires, making 911 million shares eligible for insider sale. The combination of bearish commentary and the looming supply overhang could keep pressure on the stock and, by extension, other high-profile AI and tech names that have driven much of the market's gains this year.
The broader rotation out of growth names was visible across major indices on July 28. The Nasdaq 100 fell 0.93% to 27,813.80, while the S&P 500 slipped 0.1% to 7,448.30. The Dow Jones Industrial Average gained 1.07% to 52,824.20, reflecting a shift into value and defensive sectors as technology names lagged.
Schiff's warning echoes a broader skepticism that has emerged as AI-related stocks retreat from elevated valuations. The economist has been a persistent critic of what he calls the "AI hype cycle," arguing that many companies in the space trade at multiples unsupported by earnings. He previously said SpaceX was "coming back down to earth" when the stock touched $110.05, calling it dangerous to buy into the hype.
For SPCX, the next catalyst is the company's Aug. 4 earnings report, followed two days later by the lockup expiration. Prediction markets assign only a 4% probability of SPCX closing above $150 by month-end, according to Polymarket data. Bernstein SocGen analyst Douglas Harned maintained an Outperform rating and a $239 price target on the stock, implying more than 110% upside from current levels.
This article is for informational purposes only and does not constitute investment advice.
