On Monday, SpaceX’s stock fell by just over two percent, even though many viewed its 14th Starship test flight as a significant achievement. The launch encountered difficulties, including a vacuum Raptor engine failure that nearly cut the mission short, but it still reached impressive milestones. The rocket, the most powerful ever constructed, achieved a stable orbit approximately 171 miles above Earth around 20 minutes after liftoff, successfully deployed 26 V3 Starlink satellites, and performed a controlled splashdown in the Pacific Ocean.
Investors were left confused by the drop in stock price. “Explain to me why the stock is down over one percent right now from the opening,” one investor commented on social media. Another remarked, “Financial markets are clueless to how big of a deal this is.” These remarks underscore the disconnect between the launch’s technical success and the market’s lackluster reaction.
Elon Musk has stated that Starship is vital for SpaceX’s future, especially for expanding the Starlink megaconstellation and facilitating lunar missions with NASA. However, the negative market sentiment suggests that investors might have already anticipated the launch’s success, resulting in diminished enthusiasm in the stock market afterward. Moreover, SpaceX’s valuation of nearly $2 trillion appears inflated, particularly given that the company continues to incur billions in losses each year, a situation exacerbated by its merger with Musk’s AI lab, xAI.
The company primarily depends on AI compute rentals and Starlink internet services, but its expenses significantly outpace its income. The situation worsened recently when up to 328 million shares became eligible for sale, leading to a selloff that increased pressure on the stock.
Furthermore, the single Raptor engine failure on Monday raises doubts about SpaceX’s capability to meet NASA’s ambitious goals for the Moon mission.
Despite the decline in stock value, SpaceX’s shares saw a slight uptick following the opening bell on Tuesday. Nevertheless, the company has a challenging road ahead to recover the value lost since its mid-June IPO, when shares were trading almost ten percent higher than their current level.
