SpaceX shares dip below IPO price as investor concerns mount over debt and AI spending

SpaceX shares fell below their initial public offering price of $135 for the first time since listing, marking a significant shift in sentiment following the company’s historic market debut. The stock, which had risen more than 50% in its initial days of trading, dipped below the threshold on Wednesday morning before recovering slightly to close at $135.27. The decline erases the early gains that initially propelled the company to a market capitalisation of $2.2 trillion and briefly made CEO Elon Musk the world’s first paper trillionaire.

The initial offering, which raised $86 billion after underwriters exercised their option to sell additional shares, remains the largest in history. Despite the record capital raise, investors have begun to express concerns regarding the company’s spending plans and debt load. This caution follows a period of extraordinary interest driven by Musk’s ambitions to position SpaceX as a leader in artificial intelligence, including plans to launch orbiting satellite data centres powered by the sun.

Since the IPO, the company has accelerated its expansion into the AI sector. Earlier this year, Musk merged his xAI artificial intelligence company into SpaceX, creating a combined entity that is now leasing computing power to rivals Anthropic and Google at two terrestrial data centres. Additionally, SpaceX announced the acquisition of AI coding startup Cursor for $60 billion, a deal expected to close in the third quarter. These moves have intensified scrutiny over the capital intensity of the company’s new strategic direction.

Market volatility is expected to persist as employee share lockups begin to expire. At least 20% of the shares held by current and former employees will be released after second-quarter results are disclosed in the coming months, with all lockups set to expire in December. This influx of supply has contributed to the recent price instability, echoing patterns seen in other megacap debuts such as Meta, which fell significantly below its IPO price before recovering over 14 months.

SpaceX, which operates from a headquarters near Austin, Texas, while retaining significant operations in California, was added to the Nasdaq-100 index on July 7 following a rule change that allows companies to join 15 days after their IPOs. The company’s Falcon 9 rocket remains the dominant launch service globally, and its Starlink satellite broadband service continues to expand its reach. However, the current trading environment suggests that the market is reassessing the valuation of a company transitioning from a launch provider to a major player in the artificial intelligence infrastructure market.