SpaceX shares decline once more as the post-IPO surge continues to diminish.

      SpaceX shares appeared set to continue their decline as US markets reopened following the extended weekend, further deepening a drop that has significantly diminished the excitement from the largest stock market debut ever. The stock finished last week at about $185, reflecting a decrease of approximately 18 percent from the $225.64 peak reached on June 16, just four days after its Nasdaq listing under the SPCX ticker.

      The descent has been rapid, even by the standards of a hot IPO. SpaceX set its initial share price at $135 on June 12, raising around $75 billion, and surged nearly 67 percent during its first three trading days before any quarterly earnings report was released. It fell by 5 percent the following Wednesday and 3.6 percent on Thursday, marking its first two-day drop as a public entity before trading halted for the Juneteenth holiday.

      Most of the decline can be attributed to mechanical factors rather than fundamental ones. Only a small fraction of SpaceX's shares are actively traded; approximately 4 percent are available for trading, while the remainder is locked up under a staggered schedule that won’t begin to ease until around the company’s first earnings report this summer and won’t fully unlock until well into the next year.

      This limited float enhances volatility: it contributed to the stock's 67 percent rise on modest trading volumes and can equally lead to sharp declines when market sentiment shifts. Two key events triggered the downturn. On June 17, the first put options for SPCX began trading, providing skeptics with a feasible way to bet against a stock that previously had limited short-selling options due to a lack of available shares to borrow.

      Additionally, a day earlier, SpaceX announced its acquisition of Anysphere, the firm behind the AI coding tool Cursor, for $60 billion in an all-stock transaction, which caused immediate dilution for investors who had purchased shares only days prior. The Cursor acquisition also raised concerns regarding valuation. SpaceX's pricing implied a revenue multiple of around 100 times, which only seems justifiable as a wager on Starlink, Starship, and the xAI AI division the company merged with this year, rather than based on current earnings.

      Using $60 billion of newly available public stock to acquire an AI business shortly after going public indicated to investors where management anticipates future growth will originate and the extent to which it is prepared to dilute existing shareholders to achieve that growth. The underlying financials are doing significant explanatory work. Starlink, SpaceX's satellite broadband division and its closest asset to a cash generator, generated $11.4 billion in revenue last year, but average revenue per user has been declining, dropping to around $66 per month in the first quarter from $86 the prior year.

      The company remains unprofitable on a GAAP basis, with the xAI segment reporting a $4.9 billion net loss, highlighting the disparity between the stock price and the fundamentals that skeptics are emphasizing. Furthermore, a dual-class structure gives Elon Musk about 79 percent of the voting power on approximately 42 percent of the equity, meaning that the open-market shareholders facing this volatility have little influence over the decisions propelling it.

      Not everyone believed that the initial trading reflected the true value of the company. Gary Black of The Future Fund characterized SPCX’s early trading as resembling a meme stock more than a fundamentally valued security, a perception made easier by the lack of available short-selling options in those initial sessions. Morningstar, more conservatively, estimated fair value to be substantially below the IPO price. Our analysis traced a similar trajectory, from a heavily oversubscribed offering to the record Nasdaq debut, followed by the first 6 percent decline as the enthusiasm waned.

      A more significant test lies ahead. The same lock-up arrangement that has limited supply will start to release shares in the coming months, and a stock that surged from $135 to $225 on a limited float will face a very different market once the other 96 percent becomes available for sale. For now, the decline mirrors the rally in reverse. Whether SpaceX's valuation aligns more closely with its Starlink cash flows or the initial story sold at $135 will be a question resolved in the upcoming months.