Shares in tech giant SpaceX have continued their downward trajectory, falling a further 3 per cent on Thursday night to finish at $US131.11 ($187.30). This marks its eighth decline in the past nine trading sessions and the first time the stock has closed below its $US135 issue price since its monumental initial public offering (IPO) on June 12. The stock has now plummeted 42 per cent from its intraday high of $US225. SpaceX is a tech giant with ambitious plans to build data centres in space and ultimately colonise Mars, its core business revolving around space exploration and satellite internet services.
The IPO, which raised a historic $US85 billion, was subject to intense scrutiny. Its unproven plans for orbital data centres and a claimed total addressable market of $US28.5 billion were widely dissected. Despite disclosed losses and a well-known reliance on founder Elon Musk, investors bought into the float. Schroders’ head of Australian equity, Martin Conlon, highlighted how investment banks successfully lobbied index operators to reportedly “pervert and game the rules,” allowing large, loss-making companies like SpaceX almost immediate inclusion in major sharemarket indices. Bankers also aggressively targeted retail investors, with ASIC granting SpaceX unprecedented permission to pitch its float directly to Australian buyers.
This strategy, according to Mr Conlon, created a “highly imbalanced supply/demand situation” where a smaller free float set the price for a much larger paper market value. While no rules were broken, and bankers sought the best outcome for their client, the most-watched IPO in history now trading underwater just a month after launch carries significant implications. This episode may be seared into the memory of investors, particularly retail participants who may feel disadvantaged. Such a sentiment shift could make upcoming initial public offerings from anticipated AI giants like Anthropic and OpenAI a tougher sell, potentially slowing momentum in the broader artificial intelligence sector.
