Why Is SpaceX Stock (SPCX) Dropping? The Red Flags Experts Flagged Before the IPO

The most hyped IPO in history just had its worst week. SpaceX hit an all-time high of $225.64 on June 16, 2026, then fell for two straight sessions, wiping out roughly 14% in 48 hours. Some investors who bought near the peak are now sitting on a 20% loss they did not see coming. The deeper question is whether they should have.

Let's break down why SpaceX stock is falling, what the warning signs were before the IPO, how this compares to some of the most painful post-IPO crashes of the last decade, and what serious analysts are saying about what this stock is actually worth.

SpaceX Stock: IPO Hype or Red Flag?

SpaceX listed on Nasdaq on June 12, 2026, at $135 per share, raising $75 billion in the largest IPO in history. The first three days were euphoric. By June 16, the stock had climbed to $225.64, a 67% gain, before anyone had seen a single quarterly earnings report as a public company.

Sources: TradingView, Yahoo Finance, Stocktwits

Two things triggered the sell-off. SpaceX announced it was buying AI coding startup Cursor in a $60 billion all-stock deal, just days after the IPO, an immediate dilution for anyone who bought on the open market.

Then Bloomberg reported SpaceX was simultaneously planning a $20 billion bond offering. A company that just raised $75 billion, announced a $60 billion acquisition, and was planning to borrow another $20 billion raised an obvious question: how much capital does this business actually need?

There was also a structural trigger. June 17 was the first day SPCX options started trading, giving short sellers a practical way to bet against the stock for the first time. Before that, Future Fund's Gary Black noted, SPCX "traded more like a meme stock than a fundamentals-driven company."

The SpaceX Stock Price Decline: Red Flags Hidden in S-1

None of this was hidden. SpaceX reported a net loss of $4.9 billion for full-year 2025, a reversal from a profitable 2024. The cause was xAI, which SpaceX merged with in February 2026 and which burned $6.36 billion in operating losses on $12.7 billion in capital expenditure. 

Starlink generated $4.4 billion in operating profit last year, but the AI division is erasing it. In Q1 2026 alone, the consolidated net loss was $4.28 billion. The xAI situation had another layer markets largely ignored: every one of xAI's 11 original co-founders had departed before the IPO.

Musk himself said publicly in March 2026 that xAI "was not built right first time around." The entity that powers the majority of SpaceX's stated valuation upside had no original founding team left. SpaceX's S-1 projected a total addressable market of $28.5 trillion, with $26 trillion of that attributed to AI. 

Aswath Damodaran, the NYU professor known as the "Dean of Valuation," called it plainly: "This is a hallucination. I would be embarrassed to even put that number out." After reading the S-1, he valued SpaceX's equity at $1.3 trillion, roughly 28% below the IPO price, and said the stock was "too richly priced for my tastes."

And Musk controls 82-85% of the voting power. Public shareholders cannot block any capital decision, the Cursor deal, the bond offering, or whatever comes next.

SpaceX Valuation Depends on Starlink, Launch and xAI

Buying SPCX at $185 is simultaneously making three different bets.

Bet one is Starlink — the only profitable segment: $11.4 billion in 2025 revenue, $4.4 billion in operating profit, 10.3 million subscribers across 164 markets. Its economics are genuinely strong. But average revenue per user has fallen 33% since 2023 to $66 per month as SpaceX expands into lower-income markets, which means margin compression is a live risk.

Bet two is the legacy launch business, Falcon 9, Starship in development, government contracts. Strong moat, limited market size. This alone does not justify a multi-trillion dollar valuation.

Bet three is xAI. This is where the entire long-term bull case lives and where every dollar of loss is concentrated. The $60 billion Cursor acquisition is an attempt to give xAI a real product, but Cursor is an AI coding tool in a market where Anthropic's Claude Code and OpenAI's ChatGPT Codex have been taking share. Investors who bought SPCX in the first three days largely bought Bet three without realizing it.

How SpaceX’s IPO Rally Compares With Other IPOs

The post-IPO euphoria-to-crash pattern is well-documented. Here is how three prominent recent cases played out:

Sources: Yahoo Finance, 247wallst.com, Motley Fool, Fortune, Google Finance

The mechanism is the same each time. Institutional investors got in at the offering price. Retail investors who bought on day two or three at elevated prices became "exit liquidity." The business often kept growing, but the valuation was set so high that the stock took years to grow into it. SpaceX's Starlink economics are stronger than Lyft or Rivian ever were, which matters. But entry price matters just as much as business quality.

SpaceX Stock Price Targets: Why Analysts Are Split

The range of analyst targets on SPCX after the first week of trading is unusually wide:

The gap between $401 and $62 is reflects genuine disagreement about whether xAI can become profitable and whether Starship can open new revenue streams at scale. Goldman Sachs projects $474 billion in SpaceX revenue by 2030, but their model requires xAI revenue to grow roughly 100x from its current base to get there. 

Morningstar's summary: "Our valuation is the result of mathematics more than skepticism. Even at $63 per share, we give SpaceX a lot of benefit of the doubt."

SpaceX Lock-Up Expiry: The Risk Investors May Be Underestimating

One structural risk that most coverage is skipping: the December 2026 lock-up expiry. Right now, only about 4% of SpaceX shares are available to trade. The remaining 96% is locked up until December. When that supply hits the market, the thin-float dynamic that drove SPCX from $135 to $225 in three sessions could work in reverse. 

According to TD Securities' Peter Haynes, "Day 15, which should be July 6, will be the day that Nasdaq rebalances the Nasdaq 100 to reflect SpaceX's IPO shares," and BNP Paribas estimated that this addition alone would generate approximately $8 billion in passive buying. However, a Seeking Alpha analyst who modelled the mechanics rigorously found that expected Nasdaq 100 tracker demand of ~$10 billion translates to only a 1.6-2.2% temporary price impact, far less than what retail investors appear to be anticipating. 

SpaceX also will not be eligible for S&P 500 inclusion until it posts four consecutive quarters of GAAP profits, expected no earlier than late 2027.

Should You Buy the SpaceX Stock Price Drop?

SpaceX is one of the most interesting companies to go public in years. Starlink is a genuinely strong business. The long-term story has real merit. The problem is not the company. It is the entry price. At roughly $185 and approximately 90 times trailing sales, SPCX is pricing in optimism that spans three businesses, none of which have been tested through a full public-market cycle.

The December lock-up, the ongoing cash burn, and Morningstar's $62 fair value estimate all suggest more pressure is possible before the stock finds a floor. 

For investors considering investing in Spacex from India through INDmoney, SpaceX is almost certainly a great company. Whether $185 is a great price is a different question. History on IPO hype cycles suggests it is worth sitting with for at least one more quarter. The September 2026 earnings report will be the first real test of what this business looks like under public scrutiny.