SpaceX shares fell below their initial public offering (IPO) price for the first time on Wednesday, marking a sharp reversal for the aerospace company just over a month after its record-breaking stock market debut.
The stock dropped to as low as $132.28 during trading, falling below its IPO price of $135 before recovering slightly to close at $135.27, according to Reuters.
The decline comes after SpaceX briefly reached a market valuation of more than $2.6 trillion following its IPO, surpassing technology giants Microsoft and Amazon and making CEO Elon Musk the world’s first trillionaire on paper.
Wednesday’s drop means investors who bought shares at the IPO are now facing paper losses for the first time since the company’s market debut.
Analysts attributed the decline to a combination of profit-taking, concerns over the company’s lofty valuation and broader pressure on technology stocks amid rising worries about debt-financed artificial intelligence investments and the possibility of further U.S. interest rate increases.
Justus Parmar, Chief Executive Officer of Fortuna Investments, said investors seeking to cash out after the stock’s strong debut were adding pressure on the share price.
“I think the elephant in the room is there’s a lot of folks that are in the stock and maybe some of them or a good number of them are wanting to take some liquidity, which is essentially putting a lot of pressure on the stock,” he said, adding that the trend could continue through the rest of the year.
Steve Sosnick, Chief Market Strategist at Interactive Brokers, said the stock had also lost momentum due to a lack of new developments to sustain investor enthusiasm.
“There hasn’t been anything lately to remind people of some of the catalysts for why they bought SpaceX,” Sosnick said.
He noted that while falling below the IPO price was not unusual, SpaceX remains one of the world’s most closely watched technology companies, making its share performance particularly significant to investors.
