SpaceX falls to $135 IPO price as Starship launch looms

SpaceX has surrendered all of its post-IPO gains, with shares trading back at the $135 offering price ahead of a Starship test that prediction markets give an 89% chance of ending in an explosion.

SpaceX shares closed at $135.27 on Wednesday, erasing all gains from the record $86 billion June IPO, as the company prepares for a Starship test flight that could deepen the selloff.

"The stock's slide to the IPO price reflects a reassessment of near-term fundamentals against a valuation that briefly topped $2 trillion," said Keith Snyder, an analyst at CFRA Research who rates the stock a sell. "All we have is hope right now, but hope isn't a business strategy."

The stock touched an intraday low of $132.75, a 41% decline from its post-IPO peak of $225.64 reached in late June. The pullback has erased roughly $800 billion in market value from the company's peak. SpaceX's bonds have also weakened since the listing, according to the Financial Times. The stock is now held by about 200 exchange-traded funds, creating a structural bid that did not exist at the time of the IPO, according to Bloomberg Intelligence's Eric Balchunas.

The selloff tests whether SpaceX can sustain a public-market valuation built on Elon Musk's promises of AI dominance and interplanetary travel. The company faces its first major post-IPO catalyst Thursday with Starship Flight Test 13, which SpaceX plans to end with both stages crashing into the Gulf of Mexico — a planned destruction that prediction market Polymarket handicaps at an 89% probability of explosion. A successful test could restore confidence; a visible failure may push shares lower ahead of lockup expirations that will release at least 20% of shares after second-quarter results.

Analyst divergence widens as stock retreats

Of the 11 analysts covering SpaceX, seven rate it a buy, three a hold and one a sell, with a consensus price target of $242.22 — implying 79% upside from current levels. The bull case rests on Starlink monetization and defense contracts under the Space Force's National Security Space Launch Phase 3 program. SpaceX's Starlink satellite broadband network has become core infrastructure in multiple markets, and the company dominates U.S. orbital launch cadence with its Falcon 9 rocket.

The bear case centers on valuation and execution risk. SpaceX's market capitalization at the IPO briefly rivaled Amazon and Microsoft, despite the company generating a fraction of those companies' revenue. The company has used its public-market capital aggressively, acquiring AI coding startup Cursor for $60 billion in June and merging Musk's xAI into the company earlier this year at a $1.25 trillion valuation.

Lockup overhang and the Starship factor

The stock faces additional pressure from looming lockup expirations. At least 20% of shares will become eligible for sale after SpaceX discloses second-quarter results in the coming months, with all lockups set to expire by December. Current and former employees holding restricted stock may choose to sell, increasing the public float from the current 4% of total shares outstanding.

The Starship test adds a binary event risk. SpaceX's "fly, fail, fix" approach means the company treats explosions as engineering data rather than failures — the previous flight in May ended with a booster explosion. But public-market investors may not share that tolerance, particularly with the stock already trading at its IPO price. The company does not plan to recover either the booster or the upper stage on this flight, meaning both will be destroyed regardless of how the flight proceeds.

The path forward depends on how investors interpret Thursday's outcome. A clean flight that achieves its test objectives could trigger a relief rally, while a premature failure that grounds the fleet for quarters would validate bearish concerns. Polymarket assigns a 55.5% probability of SPCX closing above $130 by month-end, suggesting the market expects stabilization near current levels rather than a sharp recovery.

This article is for informational purposes only and does not constitute investment advice.