Why is SpaceX losing billions in market value after the largest IPO in corporate history?

Elon Musk-owned SpaceX’s stocks have tumbled after huge success during initial 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 technologies company set a fixed $135 per share price in initial public offering. Trading under symbol SPCX, the stock saw massive growth as it soared past $200 and hit an all-time high of $202 per share. The company’s market valuation reached $2.6 trillion.

However, the shares have since stumbled and lost almost 23 percent and are currently trading at $153 per share. Some of the analysts described the situation as a buying opportunity for investors; however, others have cautioned that stocks might decline sharply.

Why is SpaceX losing billions in market value after the largest IPO after initial success?

Although the current share price still offers a significant growth from the fixed IPO , history suggests that the company behind satellite internet service Starlink is following a pattern observed frequently by Wall Street analysts.

According to a professor of finance at University of Florida, Jay Ritter, around 9,000 companies have been listed on the U.S. stock exchanges and most of them saw an upside of 19% on the first day of trading.

The data suggest that most companies saw their stocks falling 50% below their IPO price, indicating the SPCX is expected to drop to around $70 per share during the first year of trading.

With annual revenue of roughly $19.3 billion and a valuation approaching $2 trillion, some analysts argue the company's valuation remains exceptionally rich.

Disclaimer: This article is for informational purposes only and should not be considered financial or investment advice.