The honeymoon is over with the biggest flight in the history of the stock market. SpaceX shares fell below their $135 IPO price for the first time on Wednesday, leaving thousands of UK investors who invested £271 million in Elon Musk’s spaceship staring at paper losses less than a month after launch.
Shares of the satellite, rockets and artificial intelligence company fell 2.5 percent to $132.64 in lunch trading, falling below the price set when the stock market opened on June 12. The stock pared its losses to close at $135.27, down $0.81, or 0.6 percent for the day.
It’s a sad time for a listing that last month saw its shares hit $150 on the first day. The oversubscribed float attracted huge global interest from institutional and retail investors alike, backed by 23 banks including Goldman Sachs, Morgan Stanley, Bank of America, Citigroup and JPMorgan Chase, which reportedly received hundreds of millions in cash.
For ordinary conservatives who have piled up, the picture is not so rosy. SpaceX courted retail investors at an unprecedented rate during the project, allocating 20 percent of its IPO shares to non-professional investors drawn by Musk and his promise to build “the systems and technologies needed to make life possible on many planets”. UK retail investors alone spent £271 million to become part of it.
Many of those sponsors will be business owners and entrepreneurs who see this float as a once-in-a-lifetime opportunity. The opinion of everyone who bought at the IPO price and held on is now uncertain.
The fundamentals have not changed since the company lifted the financial veil before the listing. SpaceX, founded in 2002, made its name building rockets and launching satellites, but most of its $18.7 billion in revenue last year came from its Starlink satellite internet business. The company has reported $4.9 billion in net losses by 2025.
What has changed is the situation.
“There hasn’t been anything recently to remind people of some of the reasons they bought SpaceX,” said Steve Sosnick, senior market analyst at Interactive Brokers.
“The fact that the stock is down a few dollars below the IPO price in itself is not a disaster but SpaceX is highly regarded and plays an important role in the minds of investors.”
The prices involved are always amazing. SpaceX raised nearly $86 billion in its IPO and ended its first day of trading at an estimated $2.1 trillion, making Musk the world’s first billionaire. By Wednesday afternoon in New York the prices had risen to $1.8 trillion.
Musk’s net worth dropped to $861 billion, according to the Bloomberg Billionaires Index, although he remains the richest man in the world, ahead of Google founder Larry Page by $306 billion.
For UK business owners, this episode is a timely reminder that even the hottest listings obey gravity. Day one pops reward those who sell, not those who hold, and the Financial Conduct Authority’s guidance on understanding high-risk investments makes the point clear: the higher the potential profit, the greater the risk of losing your money.
A $2.64 dip below the float price is hardly a disaster. But for the small investors who helped fund the largest IPO in history, the rocket ride is, for now, back on track.
