SpaceX briefly fell below its IPO price of $135

SpaceX, Elon Musk’s rocket and artificial intelligence company, fell below its initial public offering price of $135 on Wednesday before closing the day slightly above it, raising questions for other tech companies looking to test public markets.

Shares of SpaceX fell more than 2.5 percent in intraday trading, below the price of $135 when the company went public last month, ending the day at $135.27. Its IPO, the largest ever, raised $85.7 billion and signaled that investors were hungry not only for SpaceX, but also for the potentially big public market debuts of AI companies Anthropic and OpenAI.

Still, SpaceX’s bumpy ride may lead Wall Street to think otherwise. The company’s market capitalization briefly surpassed Amazon and Microsoft last month to approach $3 trillion after its stock hit $225.64. After days of declines, it is now worth around $1.782 trillion.

OpenAI is already leaning toward delaying its public offering until next year. Sam Altman, the chief executive, has been pushing the company’s investment bankers and others to find a way for the start-up to be valued at $1 trillion when it goes public, up from its last private valuation of $730 billion.

SpaceX’s fluctuations were not unexpected given the exuberance among institutional and retail investors during the IPO and the relatively low number of shares available for trading. Less than 5 percent of the company’s outstanding shares can be bought and sold, and strong demand in the days after the IPO contributed to a sharp rise in the price.

Drew Cupps, a portfolio manager at Polen Capital, which invested in SpaceX after its IPO, attributed the decline in shares to “a reversal in investor optimism about data center spending.”

“There is nothing positive about an IPO price breach, although it is not a death knell either,” he said. He recounted how Facebook, now called Meta, fell below its IPO price after its 2012 public offering and stayed below that for about a year before surging.

More SpaceX shares will become available for trading in the coming months as lock-up agreements — which prevent shareholders from getting rid of shares immediately after the IPO — expire, allowing employees and early investors to sell their shares. More sellers and increased stock supply could weaken the stock price.

In an expected move, SpaceX gained accelerated entry into the Nasdaq-100 last week, essentially forcing index funds to buy the stock. However, its share price did not rise.

SpaceX’s falling share price follows a broader decline in the stock market as investors question the durability of huge bets by AI companies. Shares in the group of giant tech stocks called the Magnificent Seven — Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla — fell about 9 percent in June.

Other recently public companies have also suffered. Silicon Valley AI chip maker Cerebras is trading below its IPO price of $185 a share after raising $5.55 billion in May. Shares of SK Hynix, a maker of memory chips in South Korea, are fluctuating after raising $26.5 billion in a U.S. listing last week, but are still trading above their IPO price of $149.

In recent IPOs, share prices rose an average of 32 percent after the first day of trading, but fell 26 percent after 12 months, JP Morgan analysts said in a report.

The performance of SpaceX shares after the public offering made Mr. Musk the world’s first billionaire. The rocket maker has shed that 13-figure net worth as its stock has tumbled, and is now worth around $850 billion, according to the Bloomberg Billionaires Index.

After its IPO, SpaceX used its soaring stock price to close a $60 billion all-in deal for Cursor, a start-up that develops AI tools for writing computer code. Speculation that Mr Musk could also use SpaceX to acquire his electric car maker Tesla, which has a market value of $1.481 trillion, has also been rife.

Joe Rennison contributed reporting from New York.