SpaceX has only been publicly traded for a few weeks, and its stock price has already plummeted by a third from its peak.

Written by: Zhao Ying, Wall Street Vision

SpaceX has only been publicly traded for a few weeks, and its stock price is already precarious. After three consecutive days of decline, the stock price of this Musk-owned rocket and satellite company is now just a step away from the IPO issuance price, as market confidence in this largest IPO in history is undergoing severe tests.

On Tuesday, SpaceX's stock price fell 2.2%, closing at $136.08 per share, just $1 higher than the IPO issuance price of $135 last month. Since the peak following its listing, the stock has now cumulatively declined by about one-third, with a market value evaporating by nearly $850 billion.

A price drop below the issuance price is not just a numerical setback for a newly listed company but also a direct impact on the market narrative carefully crafted by the company and underwriters. This initial loss for shareholders can cause some newly listed stocks to struggle thereafter. Meanwhile, the lock-up window for insider stock holdings is set to open one after another, and market supply pressure will continue to accumulate.

Three consecutive declines bring stock price close to issuance price

SpaceX completed its listing on the Nasdaq on June 12, with a first-day closing price of $160.95, setting the record for the largest fundraising in U.S. IPO history. However, since then, the stock price has been under pressure, and after three consecutive days of decline recently, it has fallen below the first-day closing price and is approaching the issuance price of $135.

Ken Mahoney, CEO of Mahoney Asset Management, stated, "We still believe SpaceX has not hit bottom yet. There will be a continuous influx of stock supply in the coming months, and we need to closely monitor whether demand can support it then."

According to Bloomberg data, excluding special purpose acquisition companies, the overall weighted average return for U.S. IPOs in 2026 has dropped to 5.3%, with SpaceX being one of the main drag factors. The overall return of this group is about half of the performance of the S&P 500 index during the same period.

High valuation and lock-up pressure create dual concerns

Market concerns about SpaceX stem not only from short-term stock price trends but also from the dual pressure of its valuation level and stock supply.

From a valuation perspective, SpaceX currently has a projected price-to-sales ratio exceeding 30 times, ranking among the top stocks in the Nasdaq 100 index, only slightly lower than Palantir Technologies Inc. Doubters believe this level does not provide enough margin of safety for the stock price.

At the same time, the company faces a long lock-up period arrangement, with insider holdings set to be gradually released into the market over the coming months. Ken Mahoney pointed out that the ongoing release of supply will exert pressure on the stock price, especially when demand remains unclear.

Wall Street analysts remain bullish, but the market is voting with its feet

Despite the continued decline in stock price, the overall stance of Wall Street analysts remains bullish. According to Bloomberg compiled data, over a dozen investment banks, including Morgan Stanley, JPMorgan, and Goldman Sachs, have initiated coverage with buy ratings. Currently, more than 80% of analysts recommend buying, with an average target price of $236.25, more than 70% higher than Tuesday's closing price.

However, the divergence between market performance and analysts' expectations reflects a cautious sentiment from investors towards newly listed stocks with high valuations. Bloomberg's analysis of 30 major tech stock IPOs over the past 15 years shows that these stocks experienced an average maximum decline of 55% in their first year of listing, indicating that the volatility of newly listed stocks in their early stages is somewhat universal.

SpaceX is not the only large IPO this year that has fallen below its first-day closing price. According to Bloomberg data, among the 10 largest IPOs this year, 6 have seen their stock prices drop below the first-day closing levels, with a record-setting IPO year similarly accompanied by widespread volatility.

Price drop may trigger bottom-fishing buy orders; some investors are on the sidelines

A drop close to the issuance price could also bring an opportunity. For investors who previously did not participate in the IPO subscription, the price around $135 may present an attractive entry point.

Talley Leger, Chief Market Strategist at Wealth Consulting Group, stated that he chose to wait during the IPO phase because he anticipated that SpaceX would subsequently be included in the Nasdaq index—his company holds a fund that tracks this index. "If the decline continues, I might consider buying some individual stocks because I align with the company's vision and goals," Leger said.

SpaceX was just added to the Nasdaq 100 index last week through an expedited inclusion rule. Investors and underwriters will closely monitor the performance of SpaceX and South Korean chip manufacturer SK Hynix Inc.'s American depositary shares in the coming weeks, as both companies completed their record-setting IPOs within less than a month of each other.