SpaceX stock price has suffered a major crash a few days after it launched the biggest initial public offering (IPO) on record. SPCX tumbled to $154, down sharply from its all-time high of $225.80.
As a result, Elon Musk’s net worth has tumbled by $300 billion, and he may soon lose his trillionaire status.
Elon Musk’s net worth crashes amid the SpaceX stock crash
Data shows that Musk’s wealth cratered by over $152 billion on Monday as investors continued dumping SpaceX shares. He is now worth about $1.08 trillion, down from over $1.3 trillion last week.
The ongoing SpaceX stock crash is in line with our prediction in several pieces before the IPO, as you can see hereand here.
This performance is in line with that of other companies that have gone public in the past few months.
A good example of this is Circle, whose stock went parabolic after the IPO, reaching a high of $300. It then reversed a few months later and reached a record low of $49.
Other recent IPOs have suffered a similar fate. This includes companies like Bullish, Gemini Space Station, Wealthfront, and Figma. All these names are trading at a much lower price than they did a few months ago.
The ongoing retreat is happening as investors book profits after the stock jumped to a record high. Also, the hype surrounding the IPO has started to fade in the past few days.
SpaceX’s actions have contributed to the retreat
There are other reasons why the stock has crashed in the past few days. First, the company announced the $60 billion Cursor buyoutlast week.
It will spend $60 billion doing that, a price that analysts believe is quite high, even for a company whose ARR has jumped to over $6 billion.
Second, the company announced its first bond sale worth $20 billion, days after its IPO. That is a sign that the management expects its AI costs to remain at an elevated level.
Third, there are fears that Grok, its main AI product, is lagging behind other popular names like ChatGPT and Claude. Grok has a much smaller share than these products, which may push it to spend more to bridge the gap.
Most importantly, there are signs that the company is highly overvalued. It made $18 billion in revenue last year and had a net loss of close to $5 billion.
As a result, its peak valuation of over $3 trillion was much higher than its intrinsic value. Indeed, Morningstar analysts believe that the company should be valued at less than $1 trillion.
All hope is not lost for SpaceX
Looking at the historical performance of most companies shows that all hope is not lost. Data shows that 91% of all companies that go public rise and then plunge a few days after that.
However, this retreat usually creates a good entry point for most investors. This is what happened with companies like Meta Platforms, Tesla, and Google. They initially jumped, cratered, and then embarked on a multi-year rally.
The same will likely happen with SpaceX as long as it demonstrates consistent revenue and profitability growth. The challenge, however, is that it is hard to time the market on when it will bottom and start its rebound.
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