The fireworks were flying on June 12, with arguably the most anticipated initial public offering (IPO) of the decade making its debut: Elon Musk's SpaceX (SPCX 3.67%)
SpaceX displaced oil giant Saudi Aramco as the largest IPO capital raise in history ($75 billion) and closed out its first trading session with a market cap of approximately $2.1 trillion. Musk's artificial intelligence (AI) and space economy conglomerate surpassed the likes of Broadcom, Tesla, and Meta Platforms to become the seventh-largest publicly traded company.
But this wasn't the only history made on Friday. A little more than 20 minutes after the first SpaceX trade printed on the Nasdaq exchange, it earned its first Wall Street sell rating.
Image source: Getty Images.
SpaceX stock can plunge by 29%
Despite a veritable army of IPO underwriters and historic retail investor buzz, CFRA analyst Keith Snyder christened SpaceX with its first sell rating and a price target of $115. Based on its closing price of $160.95 from its first day as a public company, CFRA's target implies a decline of up to 29%.
Snyder's criticisms of SpaceX focus on execution risks from its space segment and growth uncertainty tied to AI start-up xAI.
$SPCX-SPACEX : CFRA INITIATES COVERAGE WITH SELL RATING; TARGET PRICE $115
-- *Walter Bloomberg (@DeItaone) June 12, 2026
Concerning the former, Snyder questioned the development of SpaceX's reusable launch vehicle, Starship. Though Starship is at the heart of reducing launch costs, the capital-intensive and time-sensitive nature of this operating segment leaves it prone to delays and other potential setbacks.
CFRA's note also calls into question the sustainability of xAI's growth trajectory. While SpaceX's prospectus assigned xAI the lion's share of its $28.5 trillion addressable market, Snyder urged caution, as xAI lacks the margins or differentiation to warrant a premium valuation.
Image source: Getty Images.
History hasn't been kind to game-changing IPOs or tech innovations, either
In addition to the points made by CFRA when assigning its sell rating, SpaceX is facing several historical headwinds.
For starters, every next-big-thing technology since the advent and proliferation of the internet has endured an early stage bubble-bursting event. These bubbles occur (and subsequently burst) because investors consistently overestimate the adoption and/or optimization of new technologies. SpaceX appears to be years away from optimizing AI and space infrastructure to maximize sales and profits.
Moral of the story-do NOT chase hot IPOs
-- Puru Saxena (@saxena_puru) June 3, 2026
Year-1 average drawdown = 55%
Year-1 median drawdown = 54%
Table: Truist pic.twitter.com/xt864JD4Xh
To build on this point, large-scale tech IPOs have a terrible track record over the last 14 years. According to data aggregated by Truist Financial, 30 of the largest tech IPOs since May 2012 (the debut of Facebook, now Meta Platforms) have averaged a year-one drawdown of 55%! If SpaceX adhered to the average drawdown, its shares could plunge below $80 as retail investor euphoria fades.
Musk's SpaceX is also facing historical valuation headwinds. Over the last three decades, no company at the forefront of a game-changing technological trend has been able to sustain a price-to-sales (P/S) ratio above 30 for an extended period. Based on SpaceX's day one closing value of $2.1 trillion, it's trading at a P/S ratio of nearly 113!
Historical and operational headwinds are stacked against SpaceX. CFRA's sell rating is likely the first of many.
