Topline
A selloff in SpaceX shares extended on Thursday, erasing much of the rocket company’s gains since its record-setting debut after its $60 billion all-stock deal for AI coding startup Cursor sparked concerns among analysts.
Elon Musk’s rocket firm pulled back from a rally that pushed its market value ahead of Amazon and Microsoft.
Getty Images
Key Facts
Shares of SpaceX declined by more than 6% to just under $179 as of Thursday afternoon, extending Wednesday’s decline of nearly 5% and a 20% dive since hitting a high above $225 on Tuesday.
That marks a roughly $620 billion reduction in SpaceX’s market value since its Tuesday peak, lowering to $2.37 trillion from about $2.99 trillion, when SpaceX ranked the world’s fourth-largest company ahead of Amazon and Microsoft (it now ranks seventh, behind No. 6 TSMC at $2.38 trillion).
SpaceX on Tuesday disclosed it would acquire Cursor for $60 billion in stock, representing roughly 3.4% dilution—meaning investor stakes will represent a smaller percentage of the company—of SpaceX’s $1.77 trillion IPO valuation.
Morningstar analysts lowered its fair value estimate for SpaceX to $62 from $63, citing a “sizable dilution” of SpaceX shares following the Cursor deal, noting a best-case scenario would price shares at $169 should its AI revenue improve.
It’s a cooling from the record-setting demand since its debut: Investors purchased $369.8 million in SpaceX shares over its first three sessions, accounting for more than quadruple the funds poured into Nvidia ($88.2 million) over the same period, according to a Vanda Research note on Wednesday.
Option trading for SpaceX also debuted on Tuesday, allowing investors to bet against the stock, and Susquehanna analyst Chris Murphy wrote in a note that there was a 15% chance the stock would lose half its value over the next three months because of option trades.
contra
Oppenheimer analyst Timothy Horan applauded SpaceX’s deal for Cursor in a note on Thursday, claiming the acquisition could boost its shares to $250 by the end of the year, up from an earlier projection of $190. “This deal is beneficial for both sides,” Horan wrote, adding that Cursor will have access to SpaceX’s computing power, while SpaceX gets Cursor’s AI technology, engineering talent, training data and user base.
forbes valuation
A further decline in SpaceX shares reduced CEO Elon Musk’s net worth by $67.8 billion to about $1.2 trillion, according to Forbes’ estimates. His fortune hit a record high above $1.4 trillion amid SpaceX’s three-day winning streak, and Musk still ranks well above Google cofounder Larry Page ($300.8 billion) as the richest person in the world.
key background
SpaceX shares skyrocketed 50% above its $135 IPO price through its three-day streak, boosted by record-setting investor demand. Morningstar analysts have warned investors about trading SpaceX shares since before its IPO, arguing the company is “significantly overvalued” and that its market value is tied to technologies it claims are “novel and untested.” PitchBook’s Franco Granda wrote in March that SpaceX may trade similarly to Tesla “on steroids,” as trading in Musk’s automaker is often volatile among other mega-cap stocks. Other analysts have claimed SpaceX has emerged as the latest meme stock, including Swissquote analyst Ipek Ozkardeskaya, who said investors are buying SpaceX “in the expectation that others will buy too and push the price higher.” Ozkardeskaya argued SpaceX is “burning cash,” as its Starlink business has been unable to counter heavy spending on space exploration.
Leave a comment