SpaceX (SPCX +11.15%), the aerospace and AI company founded by Elon Musk, went public at $135 per share on June 12. Its stock closed at a record high of $211.39 on June 16, but it now trades at about $140. Let's see why it slumped -- and where it might be headed.
Why did SpaceX's stock soar and sink?
A low float (it offered less than 5% of its shares) and market hype drove SpaceX's initial rally. But at its peak, SpaceX's market cap hit $2.64 trillion -- or 141 times the $18.7 billion in revenue it generated in 2025. Even though its revenue rose 33% in 2025, its sky-high valuation was unsustainable. As the euphoria from its IPO faded, investors fretted over its steep losses and aggressive spending plans -- and its stock crumbled under the weight of its lofty valuations.
Image source: Getty Images.
SpaceX's hasty takeover of xAI (which houses Grok, X, and its other AI assets) right before its IPO also raised red flags. Before that acquisition, SpaceX generated a slim profit as Starlink's profits offset its launch service segment's losses. But after that acquisition, the losses from its AI and space divisions wiped out Starlink's profits. That pressure will intensify for the foreseeable future as SpaceX ramps up its AI-driven investments and acquisitions.
Musk claims SpaceX can generate more than $1 trillion in annual revenue by 2030, but its space, satellite, and AI businesses would need to grow much larger to hit that target. For now, analysts expect its revenue to grow to $155 billion by 2028. That's an impressive 5-year CAGR of 103% from 2025, but it would need much bigger catalysts to reach $1 trillion by 2030.
NASDAQ: SPCX
Key Data Points
Where will SpaceX's stock head next?
With a market cap of $1.76 trillion, SpaceX trades at 39 times this year's sales. That price-to-sales ratio is still high, but it doesn't look as overheated as it did in mid-June.
However, SpaceX's valuation -- along with its upcoming lockup expirations through the end of the year -- should limit its near-term gains. Many other hot IPOs -- including Meta, Alibaba, and Snowflake -- faced similar pullbacks after their widely hyped market debuts.
While it might be tempting to buy SpaceX as it revisits its IPO price, it could sink even lower if the market crashes or the company fails to meet Wall Street's sky-high expectations. Therefore, the history of other hot IPOs suggests we shouldn't rush to buy SpaceX's stock right now.
