Shares of SpaceX, owned by Elon Musk, have plummeted after huge success during the first few days of trading. The company made its Wall Street debut on June 12, raising $75 billion at a market valuation of $1.8 trillion.
The space exploration technology company set a fixed price of $135 per share in the initial public offering. Trading under the symbol SPCX, the stock saw massive growth as it surpassed $200 and reached an all-time high of $202 per share. The company’s market valuation reached $2.6 billion.
However, the stock has since stumbled and lost nearly 23 percent and is currently trading at $153 per share. Some analysts described the situation as a buying opportunity for investors; However, others have warned that shares could fall sharply.
Why is SpaceX losing billions in market value after the largest IPO after initial success?
Although the current stock price still offers significant growth from the flat IPO, history suggests that the company behind satellite internet service Starlink is following a pattern frequently seen by Wall Street analysts.
According to Jay Ritter, a finance professor at the University of Florida, about 9,000 companies are listed on American stock exchanges and most of them registered a 19% increase on the first day of trading.
The data suggests that most companies saw their shares fall 50% below their IPO price, indicating that SPCX is expected to fall to around $70 per share during the first year of trading.
With annual revenue of approximately $19.3 billion and a valuation close to $2 trillion, some analysts argue that the company’s valuation remains exceptionally rich.
Disclaimer: This article is for informational purposes only and should not be considered financial or investment advice.
