In a significant market pullback, shares of SpaceX fell more than 6% on Thursday, continuing Wednesday’s nearly 5% decline. This downturn effectively wiped out a large portion of the gains the rocket company had achieved following its recent $60 billion all-stock acquisition of AI coding startup Cursor. Following the decline, SpaceX’s market valuation dipped from nearly $2.99 trillion to about $2.37 trillion, ranking it seventh among global companies, just behind TSMC.
The recent selloff follows a substantial rally that saw SpaceX’s value temporarily surpass that of giants like Amazon and Microsoft. On Tuesday, investors had enthusiastically reacted to SpaceX’s announcement of the Cursor acquisition, with shares surging to a high of over $225. However, this optimism was tempered by concerns over a 3.4% dilution of investor stakes resulting from the stock deal, which many analysts believe may have set the stage for a correction.
Morningstar analysts revised their fair value estimate for SpaceX from $63 to $62, citing the pronounced dilution of shares as a key factor. They projected that if AI revenue performance improves, shares might stabilize at around $169 in a best-case scenario. In contrast, during its first three days of trading, the demand for SpaceX shares reached an impressive $369.8 million, significantly outpacing Nvidia’s $88.2 million in the same timeframe, according to Vanda Research.
The introduction of options trading for SpaceX shares allowed investors to hedge against stock losses, with analysts highlighting a 15% chance of the stock losing half its value over the next three months based on these options. Despite the selloff, some analysts retained a positive outlook on the Cursor acquisition. Oppenheimer’s Timothy Horan praised the deal, suggesting it could drive the stock price to $250 by the year’s end, up from an earlier estimate of $190. Horan emphasized that both SpaceX and Cursor stand to benefit from the merger, giving Cursor access to SpaceX’s infrastructure while bolstering SpaceX with AI capabilities.
The recent fluctuations in SpaceX’s stock have also had a significant financial impact on CEO Elon Musk, whose net worth reportedly dropped by $67.8 billion to approximately $1.2 trillion. Just days earlier, Musk’s fortune had reached a peak exceeding $1.4 trillion during SpaceX’s three-day rally. He remains the world’s richest individual, substantially ahead of Google co-founder Larry Page, whose net worth is around $300.8 billion.
SpaceX’s rapid ascent to market prominence was partly fueled by strong investor interest, as indicated by the 50% surge in stock prices over its initial trading days. However, analysts have previously cautioned about the high valuation of the company, arguing that its market cap relies heavily on innovative technologies that have yet to be fully tested. Some market observers have likened SpaceX to a “meme stock,” reflecting a speculative trading environment reminiscent of Tesla’s market behavior.
In summary, while the acquisition of Cursor initially sparked optimism among investors, the subsequent selloff raises questions about the sustainability of SpaceX’s valuation amidst market volatility.
